A new development attracted attention for the crypto exchange Binance, which has recently been in trouble in terms of the regulatory environment. According to the latest statements, the exchange will be under the supervision of a company appointed by the US Department of Justice (DoJ). This company will check Binance’s compliance with regulations. Here are the details…
Binance is under intense scrutiny
Cryptocurrency exchange Binance is facing intense scrutiny from US authorities. Following his guilty plea to money laundering charges and a hefty $4.3 billion fine in November 2023, the Department of Justice (DOJ) hired international consulting firm Forensic Risk Alliance to monitor Binance’s compliance with regulations for the next three years. FRA) was reported to have been appointed.
This appointment stems from a key requirement of Binance’s plea agreement. FRA will have extensive access to Binance’s internal records, physical facilities, and even employee interactions. It will also provide the Department of Justice with regular updates on the company’s activities. This unprecedented level of oversight aims to ensure Binance complies with all relevant regulations and prevent future violations.
Previous consultancy also worked with FTX
Early pioneers of the monitoring role were the law firm Sullivan and Cromwell. But their previous work for bankrupt crypto exchange FTX raised red flags. FTX creditors allege that Sullivan and Cromwell actively participated in FTX’s “multibillion-dollar fraud.” Therefore, it raised concerns about possible conflicts of interest with Binance. This ultimately led the Department of Justice to select FRA for the closer three-year monitoring period.
Interestingly, reports suggest that Sullivan and Cromwell may still be involved in Binance’s future. These individuals are expected to be selected for a separate five-year monitoring mission. But this time, it’s under the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). This episode of oversight reflects the complex regulatory landscape surrounding cryptocurrency exchanges.
Prison sentence for Changpeng Zhao
News of FRA’s appointment comes just weeks after former Binance CEO Changpeng “CZ” Zhao was sentenced to prison. cryptokoin.com As we reported, Judge Jones sentenced Zhao to four months behind bars for failing to implement an effective Anti-Money Laundering (AML) program at Binance. While prosecutors sought a harsher three-year prison sentence, the judge acknowledged a lack of evidence showing Zhao had direct knowledge of certain illegal activities.
This combination of events paints a picture that Binance is under intense pressure. The lengthy monitoring period combined with Zhao’s incarceration signals a strong message from US officials. Binance will need to demonstrate a genuine commitment to compliance if it wants to regain the trust of regulators and investors. The next three years will be critical for Binance. The ability to thrive during this period of intense surveillance is critical. Because it will determine its future course in the ever-evolving cryptocurrency environment.
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