The U.S. Department of Justice (DOJ) has reportedly appointed Forensic Risk Alliance (FRA), a London-based consulting firm, to oversee Binance under a three-year monitorship, sidelining the prominent law firm Sullivan & Cromwell. This decision follows the latter’s contentious role in the FTX bankruptcy case.
Shift in Monitorship
Sullivan & Cromwell, previously seen as a frontrunner for the Binance monitorship, faced setbacks due to its controversial handling of the FTX bankruptcy. Critics argue that Sullivan & Cromwell’s involvement in the FTX matter, where it earned substantial fees, was marred by allegations of failing to detect and potentially participating in fraud prior to the exchange’s collapse. The firm has defended its limited pre-bankruptcy work with FTX as largely transactional and not at fault.
Binance’s Compliance Commitment
As part of a plea agreement with the DOJ, Binance, led by CEO and co-founder Changpeng “CZ” Zhao—who has agreed to step down and was sentenced to four months in prison—consented to pay $4.3 billion in fines and appoint an independent compliance monitor. FRA’s selection marks a significant step in ensuring Binance adheres to regulatory standards and legal commitments.
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Ongoing Legal Dynamics
Despite being overlooked for the Binance role, Sullivan & Cromwell may still secure a different monitorship position with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) concerning Binance, expected to last five years. This possibility indicates the complex interplay of legal, financial, and reputational considerations impacting major law firms within the crypto industry’s evolving regulatory landscape.
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The DOJ’s choice of FRA over Sullivan & Cromwell highlights the repercussions of the latter’s alleged involvement in the FTX scandal, affecting its opportunities in high-stakes legal appointments. This development underscores the growing scrutiny and regulatory demands facing global cryptocurrency platforms like Binance.
