DOJ Picks Binance for Monitoring

Increased oversight is anticipated for Binance in accordance with the terms of its $4 billion settlement with the DOJ

Binance, the largest cryptocurrency exchange in the world, is still experiencing the lingering consequences of its $4 billion settlement with the DOJ almost six months later. This may persist for many likely ears.

To prevent future violations of U.S. money laundering regulations, the firm consented to three years of oversight under a compliance monitorship arrangement as part of the historic November 2023 agreement.

Recent reports indicate that the DOJ has now selected the superintendent of the cryptocurrency exchange.

DOJ Prompts FRA Surpassing Sullivan & Cromwell

On May 10th, Bloomberg reported, citing anonymous sources with knowledge of the matter, that the DOJ has selected the London-based Forensic Risk Alliance (FRA) as Binance’s compliance monitor.

The decision contradicts speculation that Sullivan & Cromwell, a renowned Wall Street law firm, was the preferred candidate for the coveted position.

Before the exchange’s bankruptcy, Bloomberg reported that the transition took place as the law firm remained embroiled in a dispute over its ties to FTX. Creditors of FTX have criticized the firm for failing to detect the fraudulent activities of the defunct cryptocurrency exchange’s executives.

In contrast, the Forensic Risk Alliance, established in 1999 by a group of ex-investment bankers, forensic accountants, and data analysts, has extensive experience serving as compliance monitors for the DOJ.

The firm was responsible for, among other things, the Volkswagen emissions scandal and the Teva Pharmaceuticals bribery case from 2017 to 2020.

An Important Alteration in Pace

Due to the DOJ’s ruling, Binance is anticipated to encounter heightened regulatory scrutiny, potentially impeding the velocity of its activities. The monitor will examine all internal policies and agreements of the exchange over three years to ensure adherence to stringent compliance standards.

Concurrently, Binance must reallocate substantial funds and resources to collaborate with the FRA. As the entity under monitorship, Binance may be required to provide financial support for the FRA’s expenses, which may amount to millions of dollars. However, only some things are good.

By implementing more stringent compliance standards, Binance could expand its global presence and mend its relations with regulators in several troubled jurisdictions.

Reasons Why This Is Important

The DOJ monitorship arrangement may substantially affect Binance’s operations. It could prompt a corporate restructuring and result in a deceleration of operations.

Conversely, this could facilitate the exchange in mending its relations with international regulators, enabling it to expand its global presence with assurance.