DOJ Said to Snub Sullivan & Cromwell, Appoint Competitor to Coveted Binance Monitorship: Bloomberg
The Department of Justice (DOJ) has chosen a London-based consulting firm for a coveted three-year monitorship of Binance, according to a Friday report from Bloomberg citing anonymous sources.
As part of Binance’s plea deal with the DOJ earlier this year, the crypto exchange agreed to pay $4.3 billion in fines and appoint an independent compliance monitor. The firm’s CEO and co-founder Changpeng “CZ” Zhao also agreed to step down as part of the agreement, and was sentenced to four months in prison.
According to the report, Forensic Risk Alliance (FRA) was chosen to monitor Binance over the previous frontrunner, Sullivan & Cromwell, due to the white-shoe law firm’s controversial handling of the FTX bankruptcy.
A spokesperson for the DOJ declined to comment.
FTX investors filed suit against Sullivan & Cromwell in February, alleging that the firm – which did some limited work (valued at approximately $8.5 million) for FTX before its collapse – not only failed to detect the widespread fraud at the exchange but “actively participated” in it, before becoming the exchange’s bankruptcy counsel – a lucrative job that has netted Sullivan & Cromwell nearly $200 million in lawyers fees.
Sullivan & Cromwell has denied the allegations, saying that their pre-bankruptcy work with FTX was limited in scope and “largely transactional.” Current FTX management, including CEO John J. Ray III has defended Sullivan & Cromwell’s work.
Sullivan & Cromwell’s appointment as FTX’s bankruptcy counsel met with some resistance – including from creditors, the U.S. Trustee and four U.S. senators – but was ultimately allowed to move forward.
According to Bloomberg’s report, Sullivan & Cromwell is still expected to be appointed by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to a different, five-year monitorship of Binance.
Edited by Kevin Reynolds.
UPDATE (May 10, 2024 19:29 UTC): Adds that the DOJ declined to comment.