DOJ considering new law firm as monitor for Binance amid allegations of FTX ties
The Department of Justice (DOJ) is reevaluating its decision to appoint Sullivan & Cromwell as the independent monitor for Binance due to concerns over the law firm’s relationship with FTX. Sullivan & Cromwell was on the verge of being named as the monitor to ensure Binance’s compliance with a settlement that included a $4.3 billion penalty for violating US anti-money laundering laws and sanctions regulations. However, the decision has been stalled as a result of the law firm’s previous association with FTX, which has raised doubts about its ability to oversee Binance effectively.
Sullivan & Cromwell’s involvement in handling FTX’s legal matters before and after its bankruptcy in November 2022 has attracted scrutiny and criticism in terms of its oversight capabilities. The firm had collected over $170 million in fees during its tenure with FTX, where it was responsible for locating assets worth billions of dollars. Despite assurances made by an FTX attorney to a bankruptcy court about creditors potentially recovering their funds, Sullivan & Cromwell has faced legal challenges from FTX customers and is currently under investigation by a bankruptcy investigator for its pre-collapse services.
Sam Bankman-Fried, the co-founder of FTX who was recently sentenced to 25 years, implicated Sullivan & Cromwell and other entities in his defense. However, the law firm maintains that its involvement with FTX was limited, a claim supported by the exchange’s new management, which questions the credibility of Bankman-Fried’s allegations.
In light of these concerns, the DOJ is now exploring alternative candidates for the monitorship, although the Treasury’s Financial Crimes Enforcement Network (FinCEN) still favors selecting Sullivan & Cromwell. The appointed monitor will be responsible for conducting a comprehensive review of Binance’s adherence to regulatory requirements, including thorough inspections of internal documents and direct interaction with staff to ensure full compliance with the agreed legal stipulations.