The U.S. Department of Justice appoints FRA to oversee Binance over the next three years

Author: Ciaran Lyons, CoinTelegraph; Compiler: Deng Tong, Golden Finance

The U.S. Department of Justice (DOJ) has appointed the international consulting firm Forensic Risk Alliance (FRA) to ensure that cryptocurrency exchange Binance complies with regulatory requirements over the next three years, according to people familiar with the matter.

The appointment of a third-party company to monitor the exchange's compliance over the next three years was a key requirement in Binance's plea agreement reached in November 2023, which admitted to money laundering and other federal charges and imposed a $4.3 billion fine.

According to Bloomberg on May 10, FRA will have access to internal records, office premises, and employees to provide the DOJ with updates on the company's activities.

Law firm Sullivan & Cromwell was reportedly initially the most qualified to receive the designation, but the firm’s work for rival cryptocurrency exchange FTX prior to its bankruptcy led the DOJ to appoint FRA instead.

On Feb. 17, it was reported that FTX creditors claimed that Sullivan & Cromwell was actively involved in “the multi-billion dollar fraud at FTX Group.”

As part of the class action lawsuit, the creditors stated in court documents that “S&C was aware of the negligent, false and fraudulent conduct of FTX US and FTX Trading Ltd., as well as the misappropriation of class members’ funds.”

However, Sullivan & Cromwell is reportedly expected to be selected for a separate five-year surveillance role for Binance, on behalf of the Treasury Department’s Financial Crimes Enforcement Network.

The appointment reportedly comes weeks after former Binance CEO Changpeng Zhao was sentenced to prison.

On April 30, Zhao Changpeng was sentenced to four months in prison for failing to comply with an effective anti-money laundering program at the cryptocurrency exchange.

Although prosecutors initially sought three years in prison, Judge Jones decided to shorten the sentence, claiming that there was no evidence that Zhao Changpeng had direct knowledge of Binance's specific illegal activities.