The United States Department of Justice (DOJ) is keen on helping the cryptocurrency exchange, Binance, achieve regulatory compliance. In line with this, it has enlisted Forensic Risk Alliance (FRA) to act as Binance’s oversight for the next three years. According to a rcent Bloomberg report, appointing a third-party monitor was a key part of Binance’s plea deal in November 2023. That is, when the exchange admitted to money laundering among other federal charges, and also incurred a hefty $4.3 billion fine along the line.
The implication of this appointment is that FRA now has extensive access to Binance’s internal operations and personnel data after being saddled with the responsibility of providing regular updates to the DOJ.
There's no Call To Action with the ID #3.US Department of Justice Appoints FRA to Oversee Binance Compliance
Meanwhile, there might be a little controversy around the decision to appoint FRA. Initially, law firm Sullivan & Cromwell was high up on the DOJ’s list of potential contractors for this task. However, the firm’s involvement with the bankrupt rival exchange, FTX, amid allegations of fraudulent conduct led to the DOJ choosing FRA ahead of it.
According to FTX creditors, Sullivan & Cromwell was well aware of the fraudulent activities going on at FTX and may have even actively participated in the fraud. A court filing at the time, which was part of the class-action lawsuit against the exchange, reads in part:
“S&C knew of FTX US and FTX Trading Ltd.’s omissions, untruthful and fraudulent conduct, and misappropriation of Class Members’ funds.”
There's no Call To Action with the ID #3.
Interestingly, there are indications that Sullivan & Cromwell may yet secure another 5-year monitoring role over Binance. However, that will be under the Treasury Department’s Financial Crimes Enforcement Network. The development follows the recent imprisonment of Binance’s former CEO Changpeng Zhao. As UEEx earlier reported, Zhao faced legal troubles for lapses in Binance’s Anti-Money Laundering program. Although prosecutors tried hard to secure a longer imprisonment term, he received a four-month sentence as the judge cited a lack of direct evidence linking Zhao to specific illegal activities at the exchange.
