- The US Department of Justice (DOJ) has appointed Forensic Risk Alliance (FRA) as the three-year monitor of Binance as part of a plea deal.
- Binance agreed to pay $4.3 billion in fines and appoint an independent compliance monitor due to money laundering violations.
- Binance’s co-founder Changpeng “CZ” Zhao has agreed to step down as CEO and was recently sentenced to four months in jail.
The US Department of Justice appoints Forensic Risk Alliance as the three-year monitor of Binance as part of a plea deal, highlighting the ongoing regulatory scrutiny of the cryptocurrency exchange.
DOJ Chooses FRA Over Sullivan & Cromwell
Forensic Risk Alliance was chosen over Wall Street law firm Sullivan & Cromwell to act as an independent monitor for Binance Holdings Ltd. The monitor will evaluate Binance’s practices to eliminate misconduct and establish an effective ethics and compliance program. FRA will likely be able to access Binance’s internal records and documents, ensuring that the exchange complies with the plea agreement over three years.
Controversy Surrounding Sullivan & Cromwell
Sullivan & Cromwell was one of the front-runners for the monitor role. However, controversy over its work for the now-defunct FTX exchange might have influenced the DOJ’s decision to choose FRA. FTX creditors launched a class action lawsuit against Sullivan & Cromwell, accusing the law firm of being complicit in the exchange’s collapse. FTX’s new management has defended S&C while touting its recovery efforts for the company.
Binance Fined $4 Million in Canada
Besides the United States, Binance has been facing significant regulatory pressure in other countries. Recently, the world’s largest cryptocurrency exchange was fined $4.4 million by Canada’s financial regulator, FINTRAC, for failure to comply with money-laundering protections. Binance failed to register with the Canadian financial regulator and report large virtual currency transactions.
Conclusion
As Binance’s regulatory woes continue to mount, the exchange maintains its commitment to increasing compliance. The recent establishment of the company’s first-ever board of directors appears to be a move in this direction. However, the appointment of FRA as a monitor and the hefty fines in multiple countries underline the significant challenges Binance faces in its path towards regulatory compliance.
