The U.S. Department of Justice (DOJ) has appointed Forensic Risk Alliance (FRA) as Binance’s external regulator following the exchange’s guilty plea to violating U.S. money laundering regulations and trade sanctions.

FRA was chosen over Wall Street law firm Sullivan & Cromwell and several other major contenders, according to the sources, who requested anonymity because of the confidentiality of the matter.

As of now, the U.S. Department of Justice, Wall Street law firm Sullivan & Cromwell, and Forensic Risk Alliance (FRA) have not made an immediate public response to the relevant matters.

As of now, the U.S. Department of Justice, Sullivan & Cromwell law firm, and Forensic Risk Alliance (FRA) spokespersons have not made immediate comments on the matter. Binance had agreed to the request to designate an external monitoring agency in its plea agreement as early as November last year. As part of the agreement, Binance, the world's largest cryptocurrency trading platform, agreed to pay a fine of $4.3 billion. At the same time, Binance's founder Zhao Changpeng also admitted his guilt and agreed to resign as CEO. He was sentenced to four months in prison on April 30.

The Forensic Risk Alliance (FRA) is tasked with ensuring that Binance complies with the terms of its plea agreement. To this end, FRA will have access to Binance's internal documents, facilities, and employees, with the goal of monitoring Binance's conduct and reporting to the government. FRA is recognized for its expertise in handling corruption, fraud investigations, and compliance, having previously served as an advisor to commodity trading company Gunvor SA in its $660 million settlement with the U.S. Department of Justice over foreign bribery charges.

Sullivan & Cromwell was initially considered the best choice to serve as Binance's external regulator, but encountered challenges due to its connection with FTX. Sullivan & Cromwell provided legal services to FTX before FTX declared bankruptcy in November 2022, and continued to serve as its main external legal counsel after FTX's bankruptcy. This relationship has raised some concerns, especially after FTX's collapse, when transparency and conflicts regarding its internal management and legal counsel roles became the focus of discussion.

Additionally, some FTX investors and stakeholders have questioned Sullivan & Cromwell’s role in FTX’s bankruptcy, arguing that the firm may have failed to fully disclose its relationship with FTX, which may have affected its candidacy as Binance’s regulator.

In the FTX collapse, Sullivan & Cromwell law firm has been criticized by some critics, including investors who suffered financial losses in the FTX collapse, who believe that the firm failed to expose the fraud of FTX co-founder Sam Bankman-Fried. Despite facing criticism, FTX's new management has defended Sullivan & Cromwell and praised their efforts in the recovery work.

Despite the controversy and constant questioning, Sullivan & Cromwell's legal services after FTX's bankruptcy have been recognized in part. In addition, FTX also pointed out that without the efforts of a professional advisory team including Sullivan & Cromwell, more funds may have been lost or stolen, and customer compensation would have been far lower than currently expected.

FTX announced a bankruptcy compensation plan this week, under which FTX will fully compensate customers for losses incurred due to bankruptcy and pay interest. Specifically, FTX said that once all asset sales are completed, the company will have $14.5 billion to $16.3 billion in funds available for access, while FTX currently owes customers and other non-government creditors about $11 billion.

Although Sullivan & Cromwell was not selected as Binance’s external monitor, it is expected to obtain separate monitorship of Binance on behalf of the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) for a period of five years. The role will involve identifying and reporting tens of thousands of suspicious activity transactions that Binance has been accused of ignoring by the U.S. Department of Justice (DOJ) in the past. #Binance #监管机构