DOJ Postpones Decision on Sullivan & Cromwell as Binance Monitor
The Department of Justice (DOJ) has put a hold on its decision to appoint Sullivan & Cromwell as the independent monitor for cryptocurrency exchange Binance, citing concerns over the law firm’s previous ties to FTX. Sullivan & Cromwell was on the verge 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, as part of an agreement with the DOJ and FinCEN.
The delay comes as a result of Sullivan & Cromwell’s involvement in handling legal matters for FTX before and after its bankruptcy in November 2022. The law firm’s role and capabilities in overseeing compliance have come under scrutiny, particularly due to its past association with FTX. Despite FinCEN’s initial leaning towards selecting Sullivan & Cromwell, DOJ officials are now exploring other candidates for the monitorship.
Sullivan & Cromwell’s work with FTX included collecting over $170 million in fees related to bankruptcy proceedings, where the firm was responsible for locating assets worth billions of dollars. However, legal challenges from FTX customers and an ongoing examination by a bankruptcy investigator have raised questions about the law firm’s conduct.
FTX’s co-founder, Sam Bankman-Fried, who was recently sentenced to 25 years, implicated Sullivan & Cromwell in his defense. The law firm maintains that its involvement with FTX was limited, a claim supported by the exchange’s new management. The controversy surrounding Sullivan & Cromwell’s ties to FTX has prompted the DOJ to reconsider its suitability as Binance’s independent monitor.
The monitor appointed for Binance will play a crucial role in ensuring the company’s compliance with regulatory requirements. This includes reviewing internal documents and interacting with staff to guarantee adherence to legal stipulations. Given the significant penalties imposed on Binance for previous violations of anti-money laundering laws and sanctions regulations, the monitor’s oversight is essential in upholding regulatory compliance.
As the DOJ reevaluates its choice for Binance’s independent monitor, the cryptocurrency exchange and its stakeholders await further developments in this ongoing saga. Stay tuned for updates on this evolving story.
