DOJ appoints Forensic Risk Alliance as Binance monitor

The Justice Department named Forensic Risk Alliance as Binance’s outside monitor after it pleaded guilty to violating U.S. money-laundering regulations and trade sanctions.

According to sources who requested anonymity due to the confidentiality of the matter, the Forensic Risk Alliance (FRA) was selected over Wall Street law firm Sullivan & Cromwell and several other top contenders.

Neither the Justice Department nor spokespeople for Sullivan & Cromwell or FRA provided immediate comments. The monitor appointment was a stipulation of Binance’s November plea agreement. The world’s largest crypto exchange also consented to pay $4.3 billion in penalties. Binance’s founder, Changpeng Zhao, pleaded guilty and agreed to step down as CEO, receiving a four-month prison sentence on April 30.

FRA will ensure Binance’s compliance with the plea agreement, granting the firm access to internal records, facilities, and employees to report on the company’s activities to the government. FRA, known for its expertise in corruption, fraud investigations, and compliance, previously served as a consultant for Geneva-based commodities trader Gunvor SA during its $660 million resolution with the Justice Department over foreign bribery charges.

Sullivan & Cromwell was initially the frontrunner for the role but faced setbacks due to its controversial work for FTX, a Binance rival. The firm’s involvement with FTX before its November 2022 bankruptcy and subsequent role as FTX’s main outside counsel raised concerns.

Critics, including those who lost money in FTX’s collapse, argued that Sullivan & Cromwell failed to detect co-founder Sam Bankman-Fried‘s fraud. FTX’s new management, however, defended the firm against these accusations and praised its recovery efforts.

FTX announced this week that it will fully compensate its customers with interest for any losses suffered in the bankruptcy.

Despite not being selected as the outside monitor, Sullivan & Cromwell is anticipated to secure a separate five-year monitorship with Binance on behalf of the Treasury Department’s Financial Crimes Enforcement Network.

The role involves identifying and reporting tens of thousands of suspicious activity transactions that the Treasury Department accused Binance of ignoring in the past.