The Department of Justice in the United States has reportedly chosen Forensic Risk Alliance (FRA), an international consultancy firm, to ensure that cryptocurrency exchange Binance complies with regulatory requirements over the next three years, sources familiar with the matter have revealed.
As part of Binance’s plea deal in November 2023, where it admitted to money laundering and other federal charges and received a $4.3 billion fine, the appointment of a third-party firm to monitor compliance for the next three years was a crucial requirement.
According to a report from Bloomberg on May 10, FRA will have access to internal records, premises, and employees in order to provide the DOJ with regular updates on the company’s activities.
Initially, law firm Sullivan & Cromwell was expected to secure the contract, but due to its previous work for rival crypto exchange FTX before its bankruptcy, the DOJ decided to appoint FRA instead.
On February 17, Cointelegraph reported that FTX creditors accused Sullivan & Cromwell of actively participating in the “FTX Group’s multibillion dollar fraud.”
In a court filing as part of a class-action lawsuit, the creditors stated, “S&C knew of FTX US and FTX Trading Ltd.’s omissions, untruthful and fraudulent conduct, and misappropriation of Class Members’ funds.”
However, there is reportedly an expectation that Sullivan & Cromwell will be chosen for a separate five-year monitoring role for Binance, representing the Treasury Department’s Financial Crimes Enforcement Network.
This reported appointment comes shortly after Binance’s former CEO, Changpeng “CZ” Zhao, was imprisoned. On April 30, Zhao was sentenced to four months in prison for failing to maintain an effective Anti-Money Laundering program at the crypto exchange.
Although prosecutors initially sought a three-year prison term, the judge opted for a shorter sentence, stating that there was no evidence to suggest that Zhao was directly informed of specific illegal activities at Binance.
In related news, Binance has recently obtained approval from the Financial Intelligence Unit for its return to the Indian market.
This development follows an article from the Wall Street Journal and the launch of Hong Kong’s first crypto ETF, which is said to have taken in the equivalent of $50 billion.