The Department of Justice (DOJ) is revisiting its choice of Sullivan & Cromwell as the independent monitor for Binance, citing concerns over the firm's ties to FTX.

Initially, Sullivan & Cromwell was on the verge of being named as the overseer of Binance's compliance with a settlement agreement involving a hefty $4.3 billion penalty for violations of U.S. anti-money laundering laws and sanctions regulations. This appointment was part of a resolution reached with both the Justice Department and the Treasury’s Financial Crimes Enforcement Network (FinCEN).

However, the decision has hit a snag due to apprehensions surrounding Sullivan & Cromwell's past association with FTX. Questions have been raised about the law firm's ability to impartially monitor Binance, given its previous involvement with FTX's legal matters both before and after the exchange's bankruptcy in November 2022.

The DOJ is now exploring alternative candidates for the monitorship, with concerns lingering over Sullivan & Cromwell's capacity to fulfill the role effectively. Nevertheless, FinCEN remains inclined towards selecting Sullivan & Cromwell despite the reservations.

During its tenure with FTX, Sullivan & Cromwell earned substantial fees exceeding $170 million for its involvement in the exchange's bankruptcy proceedings, which included the task of locating assets valued at billions of dollars. However, the firm's handling of FTX's affairs has come under scrutiny, particularly regarding the assurance made to a bankruptcy court regarding creditors' potential recovery of funds. Legal challenges from FTX customers and an investigation by a bankruptcy examiner have further cast doubt on Sullivan & Cromwell's oversight capabilities.

Additionally, FTX's co-founder, Sam Bankman-Fried, who recently received a 25-year sentence, implicated Sullivan & Cromwell among others in his defense. Despite these allegations, the firm maintains that its involvement with FTX was limited, a position supported by the exchange's new management, which questions the credibility of Bankman-Fried's claims.

Should Sullivan & Cromwell be replaced, the appointed monitor for Binance will bear the responsibility of conducting a thorough review of the company's compliance with regulatory requirements. This will involve scrutinizing internal documents and engaging directly with staff to ensure full adherence to the agreed-upon legal obligations.