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FTX Bankruptcy Case: Sullivan & Cromwell Expected to Become Binance’s Independent Monitor

New York-based law firm Sullivan & Cromwell, currently handling FTX’s bankruptcy case, is expected to be appointed as the independent monitor for Binance Holdings. This move follows Binance’s 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. Although 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 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.

The DOJ and Treasury imposed three- and five-year monitorships on Binance following its guilty plea.
The monitor’s primary responsibility is to ensure compliance with plea agreement terms.
- Access will be granted to company data for reviews and reporting purposes.

Binance Struggles to Stay Compliant

Binance faces a significant task in bringing its compliance program up to required standards. This includes identifying and reporting thousands of suspicious transactions that were knowingly ignored in the past. Additionally, Binance’s founder 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, previously one of Binance’s top competitors before its collapse in late 2022. Co-founder Sam Bankman-Fried was convicted in November on seven criminal counts related to fraud and conspiracy involving customer funds misuse.

Binance faces challenges in enhancing its compliance program.
Founder’s guilty plea adds further legal complications.
- FTX’s bankruptcy case managed by Sullivan & Cromwell draws parallels.
- Fried’s conviction highlights criminal counts related to customer funds misuse.

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 a high-profile scandal. Last week, Binance revealed that it has taken 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 Web3 space, Binance hosted over 30 officers from INTERPOL. The exchange provided insights into effective strategies for combating cyber threats.

Regulatory Scrutiny Beyond DOJ Actions

Apart from DOJ enforcement actions against Binance, regulatory scrutiny from other regulators has also been a challenge for the exchange. In June, the Securities and Exchange Commission (SEC) initiated an enforcement action against Binance, alleging the sale of unregistered securities.

In conclusion:
– Sullivan & Cromwell is expected to take on monitoring responsibilities for Binance.
– DOJ-imposed monitorships present significant compliance challenges for Binance.
– Regulatory scrutiny beyond DOJ actions adds further complexities.
– Collaborative efforts with INTERPOL signal strengthened cybersecurity measures.

With an intricate web of legal challenges ahead for Binance, closely monitoring these developments will be crucial for investors 📈🔍.