US Department of Justice (DOJ) has selected Forensic Risk
Alliance (FRA) to oversee Binance compliance with money-laundering regulations
and trade sanctions, Bloomberg reported. This decision is part of the crypto exchange’s
plea deal following allegations of violating financial regulations. DOJ
selected FRA over renowned Wall Street law firm Sullivan & Cromwell and
other prominent contenders for the role.
As per the plea agreement, Binance is obligated to
submit to a three-year monitorship. This entails granting FRA
access to internal records, facilities, and personnel to ensure adherence to
regulatory standards. Given FRA’s expertise in corruption and fraud
investigations, the firm is deemed equipped to effectively fulfill its
monitoring duties.
This development underscores the heightened scrutiny
faced by major players in the cryptocurrency sector and highlights the pivotal
role of independent monitors in maintaining compliance . Initially considered a
frontrunner for this role, Sullivan & Cromwell reportedly faced
setbacks due to its association with FTX, a former competitor of Binance.
The firm’s involvement with FTX, particularly
preceding its bankruptcy and subsequent recovery efforts, raised concerns
regarding its ability to provide impartial oversight. Allegations of failure to
detect fraudulent activities during FTX’s downfall further tarnished Sullivan
& Cromwell’s reputation, prompting the DOJ to opt for an
alternative monitor.
Crypto Oversight Intensifies
Binance’s agreement to the monitorship and substantial
penalties underscore the increasing regulatory scrutiny surrounding
cryptocurrency exchanges. The involvement of FRA signals a commitment to
rigorous oversight and underscores the evolving regulatory landscape in the
crypto industry.
In June 2023, the Securities and Exchange Commission
(SEC) sued Binance and its Former CEO, Changpeng Zhao, alleging infringement of
securities law. The SEC’s action coincided with Binance’s $4.3 billion settlement with the DOJ concerning the legal saga. Binance opposed this move, citing procedural errors and disputing the relevance of the
DOJ’s resolutions to the SEC’s initial claims.
Besides that, a US federal judge barred Zhao from
traveling to his residency in the UAE amidst mounting concerns about
extradition and flight risks. Despite agreeing to a substantial $175 million
bond, Zhao’s considerable wealth and ties to the UAE raised apprehensions about
his commitment to returning for sentencing. Zhao was recently sentenced to four months in prison.
US Department of Justice (DOJ) has selected Forensic Risk
Alliance (FRA) to oversee Binance compliance with money-laundering regulations
and trade sanctions, Bloomberg reported. This decision is part of the crypto exchange’s
plea deal following allegations of violating financial regulations. DOJ
selected FRA over renowned Wall Street law firm Sullivan & Cromwell and
other prominent contenders for the role.
As per the plea agreement, Binance is obligated to
submit to a three-year monitorship. This entails granting FRA
access to internal records, facilities, and personnel to ensure adherence to
regulatory standards. Given FRA’s expertise in corruption and fraud
investigations, the firm is deemed equipped to effectively fulfill its
monitoring duties.
This development underscores the heightened scrutiny
faced by major players in the cryptocurrency sector and highlights the pivotal
role of independent monitors in maintaining compliance . Initially considered a
frontrunner for this role, Sullivan & Cromwell reportedly faced
setbacks due to its association with FTX, a former competitor of Binance.
The firm’s involvement with FTX, particularly
preceding its bankruptcy and subsequent recovery efforts, raised concerns
regarding its ability to provide impartial oversight. Allegations of failure to
detect fraudulent activities during FTX’s downfall further tarnished Sullivan
& Cromwell’s reputation, prompting the DOJ to opt for an
alternative monitor.
Crypto Oversight Intensifies
Binance’s agreement to the monitorship and substantial
penalties underscore the increasing regulatory scrutiny surrounding
cryptocurrency exchanges. The involvement of FRA signals a commitment to
rigorous oversight and underscores the evolving regulatory landscape in the
crypto industry.
In June 2023, the Securities and Exchange Commission
(SEC) sued Binance and its Former CEO, Changpeng Zhao, alleging infringement of
securities law. The SEC’s action coincided with Binance’s $4.3 billion settlement with the DOJ concerning the legal saga. Binance opposed this move, citing procedural errors and disputing the relevance of the
DOJ’s resolutions to the SEC’s initial claims.
Besides that, a US federal judge barred Zhao from
traveling to his residency in the UAE amidst mounting concerns about
extradition and flight risks. Despite agreeing to a substantial $175 million
bond, Zhao’s considerable wealth and ties to the UAE raised apprehensions about
his commitment to returning for sentencing. Zhao was recently sentenced to four months in prison.
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