The US Department of Justice has selected Forensic Risk Alliance (FRA), a consulting firm specializing in corruption and fraud investigations, as an outside observer for Binance. This decision comes after Binance, the world's largest cryptocurrency exchange, was found guilty of violating US anti-money laundering regulations and trade sanctions.
FRA was selected from several top contenders, including the elite Wall Street law firm Sullivan & Cromwell, which was initially chosen. The selection process was secret and the Justice Department refused to comment on the matter.
The appointment of an external monitor was a condition of the plea deal Binance struck in November. In addition, Binance agreed to pay a hefty $4.3 billion fine. Binance founder Changpeng Zhao also pleaded guilty and agreed to resign as CEO. Zhao was sentenced to four months in prison on April 30.
As the designated monitor, FRA will be responsible for ensuring Binance complies with the plea agreement. This will include gaining access to Binance's internal records, facilities, and employees to report to the government on the company's activities.
FRA previously advised Geneva-based commodities company Gunvor SA as it negotiated a $660 million settlement with the Department of Justice over foreign bribery charges.
Sullivan & Cromwell, a firm approached by many Wall Street banks and executives, was the frontrunner to monitor Binance. However, controversy surrounding the firm's work for Binance's former rival FTX caused the government to choose a different direction.
Sullivan & Cromwell served as one of the firms working for FTX before its bankruptcy in November 2022. Following the bankruptcy, he became FTX's primary outside counsel and billed approximately $170 million for efforts to recover funds for FTX's creditors.
*This is not investment advice.