New York-based law firm Sullivan & Cromwell, which is currently handling FTX’s bankruptcy case, is expected to be appointed as the independent monitor for Binance Holdings.
The move comes after Binance reached a multibillion-dollar settlement with the US government.
As part of the selection process, former federal prosecutor and firm partner Sharon Cohen Levin is set to lead the monitorship team.
While the appointment has not been officially confirmed, Sullivan & Cromwell is currently at the top of the list, and the Justice Department is nearing approval of the firm for this role, according to a Bloomberg report.
DOJ Imposed Monitorship on Binance
The Department of Justice (DOJ) and the Treasury’s Financial Crimes Enforcement Network imposed monitorships on Binance as part of its guilty plea to anti-money laundering and sanctions charges.
The monitorships would last three and five years, respectively.
The primary responsibility of the monitor is to ensure Binance’s compliance with the terms of its plea agreement and its efforts to address the deficiencies in its anti-money laundering and sanctions programs.
The monitor will have access to various company data, including records, facilities, and employees.
They will utilize this information to conduct reviews and provide periodic reports to the government.
Obtaining a monitorship is highly lucrative for the firms involved, given the extensive workload associated with overseeing a large and complex organization like Binance.
Over the past few months, numerous consulting and law firms have competed for this opportunity.
Binance Struggles to Stay Compliant
Binance faces a significant task in bringing its compliance program up to the required standards.
This includes identifying and reporting thousands of suspicious transactions that the Treasury claims were knowingly ignored in the past.
Binance’s founder, Changpeng Zhao, has also pleaded guilty to violating banking laws and is scheduled to be sentenced in April.
Sullivan & Cromwell gained attention last year for managing the bankruptcy proceedings of FTX, which was previously one of Binance’s top competitors before its collapse in late 2022.
Co-founder of FTX, Sam Bankman-Fried, was convicted in November on seven criminal counts, including fraud and conspiracy related to the misuse of customer funds.
Sharon Cohen Levin, known for her expertise in anti-money laundering and sanctions, previously led the money laundering and asset forfeiture unit at the Manhattan US Attorney’s Office.
Before joining the defense bar, she also represented Goldman Sachs in the 1MDB scandal.
Last week, Binance revealed that it has taken certain measures to fortify global cybersecurity efforts by collaborating with INTERPOL.
In a recent half-day virtual session focused on essential topics related to cryptocurrency investigations and cyber policing in the rapidly evolving Web3 space, Binance hosted over 30 officers from INTERPOL.
The exchange provided insights into effective strategies and techniques for combating cyber threats.
#Binance recently hosted a law enforcement sharing session for over 30 INTERPOL officers.
We covered cryptocurrency investigations,cyber policing and more in our ongoing mission to strengthen global efforts to crack down on cybercrime.
Read more https://t.co/fWZsGadwSK pic.twitter.com/Wl5bmuekpb
— Binance (@binance) February 9, 2024
Aside from enforcement actions brought by the DOJ, Binance has also faced regulatory scrutiny from other regulators.
In June, the Securities and Exchange Commission (SEC) initiated an enforcement action against the exchange, alleging the sale of unregistered securities.
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