DOJ Reconsiders Appointment of Sullivan & Cromwell as Binance’s Independent Monitor Amid FTX Relationship Concerns

The Department of Justice (DOJ) is facing a dilemma over the appointment of Sullivan & Cromwell as Binance’s independent monitor, as reported by Bloomberg. The law firm was on the brink of being selected to oversee Binance’s compliance with a $4.3 billion penalty for violating U.S. anti-money laundering laws and sanctions regulations. However, concerns have arisen regarding Sullivan & Cromwell’s past association with FTX, leading to a reconsideration of the decision.

Sullivan & Cromwell’s involvement with FTX, particularly in handling legal matters before and after the exchange’s bankruptcy in November 2022, has raised eyebrows. The firm’s role in the bankruptcy proceedings, where it collected over $170 million in fees, has come under scrutiny. Despite assurances to a bankruptcy court that creditors could recover their funds, Sullivan & Cromwell is facing legal challenges from FTX customers and is being investigated for its pre-collapse services.

The situation is further complicated by FTX co-founder Sam Bankman-Fried’s recent sentencing to 25 years, during which he implicated Sullivan & Cromwell in his defense. The firm, however, maintains that its involvement with FTX was limited and has the support of the exchange’s new management, which disputes Bankman-Fried’s allegations.

As the DOJ explores alternative candidates for the monitorship, FinCEN remains inclined towards selecting Sullivan & Cromwell. If appointed, the monitor will be tasked with conducting a thorough review of Binance’s compliance with regulatory requirements, including examining internal documents and interacting with staff to ensure adherence to legal stipulations. Stay tuned for further updates on this developing story.