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Haider Jamal

May 13, 2024

FRA Gets Chosen By DOJ To Oversee Binance Settlement

The United States Department of Justice (DOJ) has reportedly appointed Forensic Risk Alliance (FRA) to supervise Binance after it confessed to breaking U.S. anti-money laundering laws, leading to a substantial $4.3 billion penalty. Binance founder and former CEO Changpeng Zhao recently agreed to plead guilty to money laundering charges as part of a broad settlement with U.S. law enforcement and banking regulators.

 

FTX Is To Blame

FRA was chosen over Sullivan & Cromwell because of the latter being associated with FTX, a decision applauded by legal and crypto communities who criticized Sullivan & Cromwell for overlooking significant fraud at FTX.

The bankruptcy of FTX, which was a Bahamas-based cryptocurrency exchange, commenced in November 2022. The fall of the exchange, prompted by a surge in customer withdrawals that revealed a $8 billion hole in its accounts, was the catalyst for its bankruptcy.

 

Still A Chance

The responsibility of the FRA entails thorough monitoring of Binance and all of its internal operations to ensure adherence to U.S. regulations. They will be granted unrestricted access to all Binance records, facilities, and personnel, with a mandate to report directly to the U.S. government.

It is worth mentioning that Sullivan & Cromwell may still secure a position with the Financial Crimes Enforcement Network to oversee compliance procedures with transaction reporting rules. Additionally, Binance faces penalties beyond the U.S., having agreed to fines in India while also receiving a $4.4 million penalty in Canada for failing to comply with anti-money laundering regulations.

 

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