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DOJ Said to Snub Sullivan & Cromwell, Appoint Competitor to Coveted Binance Monitorship: Bloomberg
The white-shoe law firm’s handling of the FTX bankruptcy case has been controversial.
Updated May 10, 2024, 7:31 p.m. Published May 10, 2024, 7:11 p.m.
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.
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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.
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