DOJ Chooses Binance Monitor: What It Means for the Exchange

Binance is set to get increased oversight as part of its $4 billion settlement with the DOJ.

Attorney General Merrick B. Garland overlooking Binance and Changpeng Zhao leaving the United States.
Created by Gabor Kovacs from DailyCoin
  • The DOJ has reportedly appointed a monitor for Binance.
  • Despite previous speculation, the federal agency has not gone with the FTX-linked Sullivan & Cromwell.
  • The compliance monitorship is likely to have significant impacts on Binance’s operations.

Nearly six months later, Binance, the world’s largest crypto exchange, continues to feel the ripple effects of its $4 billion settlement with the DOJ, and it will likely continue to do so for years to come.

As part of the historic November 2023 deal, the firm agreed to three years of supervision under a compliance monitorship arrangement to ensure it does not violate U.S. money laundering rules again. According to a recent report, the DOJ has decided on the crypto exchange’s supervisor.

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Could the DOJ-appointed monitor clip Binance’s wings, or will it be a chance to mend fences with regulators?

DOJ Taps FRA Over Sullivan & Cromwell 

On Friday, May 10, Bloomberg reported that the DOJ had chosen the London-headquartered Forensic Risk Alliance (FRA) as Binance’s compliance monitor, citing anonymous sources familiar with the matter.

The decision represents a shift from previous reports suggesting that prominent Wall Street law firm Sullivan & Cromwell was the favorite for the sought-after role. According to Bloomberg, the shift comes as the law firm remains embroiled in controversy over its ties to FTX before the exchange’s bankruptcy. FTX creditors have called out the firm for failing to detect the fraud carried out by the defunct crypto exchange’s executives. 

Meanwhile, Forensic Risk Alliance, a firm founded in 1999 by a team of forensic accountants, data analysts, and former investment bankers, is no stranger to working with the DOJ as a compliance monitor. The firm handled the Volkswagen emissions scandal from 2017 to 2020 and the Teva Pharmaceuticals bribery case from 2017 to 2020, among others.

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So, what does the DOJ decision mean for Binance?

A Significant Change in Pace 

The DOJ decision means that Binance is about to face increased oversight, which could likely slow the pace of its operations. During the three years, the exchange will have all its internal policies and agreements reviewed by the monitor to ensure high compliance standards.

At the same time, Binance would have to divert significant resources and funds to work with the FRA effectively. As the subject of the monitorship, Binance will have to cover the FRA’s bills, which could run up to millions of dollars. But it is not all bad. 

By implementing stricter compliance standards, Binance may be able to smooth its relationship with regulators in several jurisdictions where it has faced trouble and eventually expand its global footprint.

DailyCoin could not reach the DOJ for comment at the time of publication.

On the Flipside 

  • It is unclear when FRA will start its Binance monitorship.
  • Under its agreement with the U.S. Treasury, Binance faces a separate five-year monitorship arrangement. Sullivan & Cromwell is still seen as the leading contender for this bid.

Why This Matters

The DOJ monitorship arrangement could significantly impact Binance’s operations. On the one hand, it will likely slow down its operations and potentially spark a corporate overhaul. On the other hand, it could see the exchange mend relations with regulators worldwide, allowing it to expand its global footprint confidently.

Read this for more about the Binance monitorship:
Will Binance Get FTX Bankruptcy Firm as DOJ Watchdog?

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Okoya David

David Okoya is a crypto news reporter at DailyCoin based in Nigeria. He covers various topics related to the cryptocurrency industry, including exchanges, regulations, and price movements, and strives to bring fresh angles to breaking news. With experience as a freelance crypto news writer, David upholds the highest journalistic standards, telling complete stories and answering lingering questions whenever possible.