The Department of Justice (DOJ) has postponed its decision to appoint Sullivan & Cromwell as the independent monitor for Binance, citing concerns over the law firm’s previous association with FTX. Sullivan & Cromwell was on the brink of being selected to oversee Binance’s compliance with a settlement involving a $4.3 billion penalty for violating U.S. anti-money laundering laws and sanctions regulations. This role was part of an agreement with both the DOJ and the Treasury’s Financial Crimes Enforcement Network (FinCEN).

The delay is due to 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 drawn scrutiny and criticism, particularly concerning its previous association with FTX. Despite FinCEN’s inclination towards selecting Sullivan & Cromwell, DOJ officials are now exploring alternative candidates for the monitorship.

DOJ Reconsiders Sullivan & Cromwell for Binance Monitoring

Sullivan & Cromwell’s tenure with FTX involved collecting over $170 million in fees related to bankruptcy proceedings, where the firm was tasked with locating assets worth billions of dollars. Despite assurances from an FTX attorney to a bankruptcy court regarding creditors’ potential full recovery, Sullivan & Cromwell has faced legal challenges from FTX customers. Moreover, the law firm is currently under examination by a bankruptcy investigator for its pre-collapse services.

FTX’s co-founder, Sam Bankman-Fried, recently sentenced to 25 years, implicated Sullivan & Cromwell, among others, in his defense. Despite these allegations, the law firm maintains that its involvement with FTX was limited, a stance supported by the exchange’s new management. FTX’s current leadership contests the credibility of Bankman-Fried’s accusations. The controversy surrounding Sullivan & Cromwell’s association with FTX has prompted the DOJ to reassess its suitability as Binance’s independent monitor.

Monitor’s Responsibilities and Regulatory Compliance

The monitor appointed for Binance will be tasked with conducting a comprehensive review of the company’s adherence to regulatory requirements. This includes inspecting internal documents and directly interacting with staff to ensure full compliance with the agreed legal stipulations. The monitor’s role is crucial in overseeing Binance’s compliance efforts, particularly in light of the significant penalties imposed for previous breaches of anti-money laundering laws and sanctions regulations.

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Filed under: News - @ January 1, 1970 12:00 am