DOJ Enlists Consulting Firm to Monitor Binance Exchange

The U.S. Department of Justice (DOJ) has made a bold move in the wake of regulatory uncertainty by assigning a powerful consulting firm with headquarters in London to monitor Binance, the largest cryptocurrency exchange in the world. The DOJ has appointed Forensic Risk Alliance (FRA) as an external monitor for a period of three years subsequent to Binance’s admission of guilt over US anti-money laundering (AML) breaches and sanctions infringements, as reported by sources quoted by Bloomberg.

Choosing the Monitor

The selection of FRA comes amidst a backdrop of intense scrutiny. Initially considered a frontrunner, New York’s Sullivan & Cromwell found itself sidelined, with controversies swirling around its alleged connections to defunct crypto entity FTX and its purported oversight lapse regarding the fraudulent activities of its co-founder, Sam Bankman-Fried. The DOJ’s pivot to FRA reflects a strategic recalibration in the wake of these concerns.

Under the terms of Binance’s plea agreement inked in November, an independent monitor is mandated to oversee its adherence to regulatory protocols. Tasked with this responsibility, FRA is empowered to delve into Binance’s internal operations, accessing records, facilities, and personnel, thereby facilitating comprehensive oversight and reporting to governmental authorities.

Specializing in forensic accounting, data governance, and compliance advisory, FRA brings a wealth of experience to the table. Notably, the firm played a pivotal role in brokering a landmark $661 million settlement between Switzerland-based trading behemoth Gunvor SA and the DOJ. This agreement, reached in the aftermath of a bribery scandal involving Ecuadorian officials, underscores FRA’s efficacy in navigating complex regulatory landscapes and fostering compliance.

While Sullivan & Cromwell’s aspirations for the DOJ monitorship might have been dashed, the firm remains poised to clinch a separate five-year monitoring stint on behalf of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This dual trajectory underscores the multifaceted approach adopted by regulatory authorities in safeguarding the integrity of the financial ecosystem.