The Department of Justice (DOJ) has decided to postpone the appointment of Sullivan & Cromwell as the independent monitor for Binance due to concerns about the law firm's previous relationship with FTX. The decision to delay the appointment comes as Sullivan & Cromwell was about to be chosen to supervise Binance's compliance with a settlement agreement involving a $4.3 billion penalty for violating U.S. anti-money laundering laws and sanctions regulations.

The delay is due to Sullivan & Cromwell's past involvement with FTX, which filed for bankruptcy in November 2022. The law firm was responsible for handling legal matters for FTX, which has raised concerns about its ability to oversee Binance's compliance. The DOJ is now considering alternative candidates for the role of independent monitor.

Sullivan & Cromwell's Previous Involvement with FTX

Before and after FTX's bankruptcy, Sullivan & Cromwell played a significant role in handling legal matters for the exchange. The law firm collected over $170 million in fees related to bankruptcy proceedings, where it was tasked with finding assets worth billions of dollars. However, the law firm has faced legal challenges from FTX customers and is currently under examination by a bankruptcy investigator for its pre-collapse services.

FTX's co-founder, Sam Bankman-Fried, who was recently sentenced to 25 years, implicated Sullivan & Cromwell, among others, in his defense. Despite the law firm's assurance that its involvement with FTX was limited, Bankman-Fried accused the law firm of wrongdoing. However, the exchange's new management has supported Sullivan & Cromwell's stance, contesting the credibility of Bankman-Fried's accusations.

The Role of the Independent Monitor

The independent monitor appointed for Binance will be responsible for conducting a thorough review of the company's compliance with regulatory requirements. This includes examining internal documents and interacting directly with staff to ensure full compliance with 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.