The DOJ is reconsidering its decision to appoint Sullivan & Cromwell as Binance’s independent monitor because of its relationship with FTX.
According to Bloomberg, the law firm was on the verge of being named to oversee Binance’s compliance with a settlement that included a $4.3 billion penalty for breaching U.S. anti-money laundering laws and sanctions regulations. The role was part of an agreement with both the Justice Department and the Treasury’s Financial Crimes Enforcement Network (FinCEN).
However, the decision has been stalled due to concerns over Sullivan & Cromwell’s previous association with FTX. The law firm’s role in handling FTX’s legal matters before and after its bankruptcy in November 2022 has drawn scrutiny and criticism, particularly regarding its oversight capabilities.
Officials from the Department of Justice are now exploring alternative candidates for the monitorship, although FinCEN remains inclined towards selecting Sullivan & Cromwell.
Series of lawsuits against FTX after SBF departure
1) Class action vs Sullivan and Cromwell
2) Adversary proceeding that crypto owned by customers
3) Objection to selling Anthropic
(John Ray wanted to sell at par initially)
4) Valuation of crypto assetsSullivan & Cromwell had…
— Sunil (FTX Creditor Champion) (@sunil_trades) April 13, 2024
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During its tenure with FTX, Sullivan & Cromwell collected over $170 million in fees related to bankruptcy proceedings, where the firm’s responsibilities included locating assets worth billions of dollars. Despite an FTX attorney’s assurance to a bankruptcy court that creditors might fully recover their funds, Sullivan & Cromwell has faced legal challenges from FTX customers and is under examination by a bankruptcy investigator for its pre-collapse services.
Furthermore, FTX’s co-founder, Sam Bankman-Fried, who was recently sentenced to 25 years, implicated Sullivan & Cromwell, among others, in his defense. Despite these allegations, the firm maintains that its involvement with FTX was restricted, a stance supported by the exchange’s new management, which contests the credibility of Bankman-Fried’s accusations.
If assigned, the monitor for Binance will be responsible for a comprehensive review of the company’s adherence to regulatory requirements.
This will include inspecting internal documents and directly interacting with staff to ensure full compliance with the agreed legal stipulations.
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