Sullivan & Cromwell Removed as Binance Monitor, May Still Be Appointed by FinCEN

Following the selection of a London-based consulting firm by the Department of Justice (DOJ) for a three-year monitoring role with Binance, Sullivan & Cromwell, previously slated for the position, may still be appointed by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for a separate five-year monitoring task. The decision to choose Forensic Risk Alliance (FRA) instead of Sullivan & Cromwell reportedly stemmed from controversy surrounding the latter’s handling of the FTX bankruptcy. This development comes after Binance signed a settlement with the DOJ in which the exchange pledged to pay $4.3bn in penalties and install an independent monitor. As part of the agreement, Changpeng “CZ” Zhao, Binance’s CEO and co-founder, also consented to leave his position and serve four months in jail. Although a representative for the DOJ declined to offer any comment, Sullivan & Cromwell has been named as the possible FinCEN appointee. This decision is subject to approval by FinCEN. In February, FTX investors filed a lawsuit against Sullivan & Cromwell, accusing the firm of failing to detect the widespread fraud at the collapsed exchange and participating actively in it prior to becoming its bankruptcy counsel. Sullivan & Cromwell refuted these claims, stating that its involvement with FTX before its demise was confined to routine transactions. In contrast, current FTX leadership, led by CEO John J. Ray III, has backed Sullivan & Cromwell’s work during the bankruptcy process. However, the appointment of Sullivan & Cromwell as FTX’s bankruptcy counsel initially faced opposition from creditors, the U.S. Trustee, and four U.S. Senators, yet it eventually gained approval. Editor’s note: This article has been updated with additional information about the DOJ’s decision.