The U.S. Department of Justice (DOJ) has assigned Forensic Risk Alliance (FRA) to oversee a three-year monitorship of Binance as part of the cryptocurrency exchange’s plea agreement.
This decision comes after Binance admitted to money laundering violations and agreed to a $4.3 billion settlement in November 2023. Additionally, co-founder Changpeng Zhao stepped down as CEO and received a four-month jail sentence as part of the resolution.
According to a Bloomberg report, FRA was chosen over Sullivan & Cromwell (S&C) for the monitoring role. While S&C had been a strong contender, controversy linked to the firm’s previous work with FTX potentially influenced the DOJ’s choice. A class action lawsuit filed by FTX creditors accused S&C of facilitating the collapse of the failed exchange. Despite FTX’s current management defending S&C’s efforts, these allegations may have affected its candidacy for monitoring Binance.
We asked @TheJusticeDept and Judge Kaplan to hold co-conspirators accountable at SBF’s sentencing
Sullivan and Cromwell were the lead to monitor Binance
DOJ has now picked Forensic Risk Alliance to monitor Binance
Well done to every FTX customer for all the victim impact… pic.twitter.com/DuDjaAr8F3
— Sunil (FTX Creditor Champion) (@sunil_trades) May 10, 2024
As an independent monitor, FRA will have access to Binance’s internal data and documents. Its primary function will be to evaluate and strengthen Binance’s compliance procedures, ensuring adherence to the DOJ agreement over the next three years.
Canadian Regulator Imposes Fine on Binance for Compliance Lapses
Binance’s regulatory troubles are not confined to the United States. Canada’s financial watchdog, FINTRAC, recently fined the exchange $4.4 million. This penalty came after Binance allegedly failed to register with the regulator and neglected to report cryptocurrency transactions.
Despite these challenges, Binance has reiterated its commitment to improving compliance, and its newly formed board of directors reflects this direction. The board is expected to enhance governance and facilitate stronger adherence to global regulatory standards.
Nigerian Allegations Against Binance May Affect Foreign Investment
In Nigeria, allegations surrounding the detention of Binance CEO Richard Teng have raised concerns about the country’s investment environment. According to consultancy firm SBM Intelligence, the alleged bribery involving Nigerian officials, purportedly requesting illicit payments from Binance executives before detaining them, might deter foreign investors. One executive, Tigran Gambaryan, managed to escape, while another remained in detention since February 28, 2024.
Read also: Hong Kong VC Leaders Examine Bull Market Valuations and Binance Power
SBM Intelligence noted that the prolonged detention of foreign business personnel could present Nigeria as an unwelcoming destination for global companies. It further pointed out that the contrasting views on cryptocurrency between the Nigerian government and its citizens have created tension. While citizens increasingly accept digital currencies for transactions and investments, authorities still need to be convinced, fearing a loss of economic control.
Addressing the detention of Binance executives in a timely and transparent manner could help restore investor confidence and avoid further negative perceptions that could hinder President Bola Tinubu’s investment efforts.
