Report: Binance to face FRA monitoring over the next 3 years

According to sources familiar with the subject, the United States Department of Justice (DOJ) has allegedly engaged the services of international consultancy firm Forensic Risk Alliance (FRA) to ensure that cryptocurrency exchange Binance complies with regulatory requirements for the next three years. As part of Binance’s plea deal in November 2023, which involved a guilty plea to money laundering and other federal charges, as well as a $4.3 billion fine, it was necessary to appoint a third-party firm to monitor the exchange’s compliance over the specified period. FRA will be granted access to internal records, premises, and employees in order to provide the DOJ with regular updates on the company’s activities, as stated in a Bloomberg report on May 10.
Initially, law firm Sullivan & Cromwell was said to be the frontrunner for the contract, but the DOJ ultimately chose FRA due to Sullivan & Cromwell’s previous work for rival crypto exchange FTX, which had recently filed for bankruptcy. Creditors of FTX had accused Sullivan & Cromwell of actively participating in the “FTX Group’s multibillion dollar fraud,” as reported by Cointelegraph on February 17. The creditors alleged that Sullivan & Cromwell had knowledge of FTX US and FTX Trading Ltd.’s deceptive and fraudulent conduct, as well as their misappropriation of funds belonging to class members, in a court filing for a class-action lawsuit. Nevertheless, it is anticipated that Sullivan & Cromwell will still be selected for a separate five-year monitoring role for Binance, this time representing the Treasury Department’s Financial Crimes Enforcement Network.
This reported appointment comes shortly after the imprisonment of Binance’s former CEO, Changpeng “CZ” Zhao. On April 30, Zhao was sentenced to four months in prison for failing to maintain an effective Anti-Money Laundering program at the cryptocurrency exchange. Although prosecutors initially sought a three-year prison term, the judge opted for a shorter sentence, citing a lack of evidence that Zhao was directly informed of specific illegal activities taking place at Binance.