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Binance 3-Year Monitorship: FRA Chosen for Oversight

Binance 3-Year Monitorship: FRA Chosen for Oversight

The US Department of Justice (DOJ) has awarded the consulting firm Forensic Risk Alliance (FRA) a three-year monitorship of Binance, according to current news reports. The exchange’s plea agreement with the Justice Department from the previous year includes this appointment. 

In November 2023, Binance agreed to pay $4.3 billion in fines and hire an independent compliance monitor as part of a plea agreement with the DOJ over money laundering offenses. Changpeng “CZ” Zhao, a co-founder of the company, also agreed to resign as CEO. He was recently given a four-month jail sentence. 

This Is Why the DOJ Selected FRA Sullivan & Cromwell aside

Unnamed sources cited by Bloomberg recently reported that Forensic Risk Alliance was chosen as an impartial monitor for Binance Holdings Ltd. Instead of Wall Street legal firm Sullivan & Cromwell. A monitor’s role is to assess an organization’s procedures, eliminate wrongdoing, and establish an effective ethics and compliance program. If the recent disclosures are accurate, London-based FRA will likely have access to Binance’s internal data and paperwork for three years. They will ensure the exchange complies with the terms of the plea deal. The article noted that Sullivan & Cromwell (S&C), based in New York, was among the top candidates for the monitor position. However, the DOJ’s decision to opt for FRA rather than the law firm may have been influenced by the controversy surrounding S&C. This stems from its previous work with the now-defunct FTX exchange.

FTX creditors filed a class action complaint against Sullivan & Cromwell in February, as reported by Bitcoinist. The claim accused the law firm of being involved in the exchange’s collapse. FTX’s new management has consistently defended S&C while praising its efforts to revive the business.

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FTX said on Wednesday, May 8, that its clients would receive a complete reimbursement for any damages they sustained due to the collapse. 

In Canada, Binance Will Pay $4 Million Owing To Problems With Compliance

Other than the US, regulatory agencies in other nations have been putting much pressure on Binance. FINTRAC, Canada’s financial authority, most recently fined the largest cryptocurrency exchange in the world $4.4 million (C$6 million).

FINTRAC charged Binance with violating anti-money laundering regulations. According to Bitcoinist, the business should have filed substantial virtual currency transaction reports and registered with the Canadian financial authorities.

Despite worsening problems with regulations, Binance has insisted on its dedication to stepping up compliance. The recent formation of its first-ever board of directors suggests that the company is heading in the right direction.

 

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