As a researcher with experience in the crypto industry and a background in investigative journalism, I find the DOJ’s decision to appoint Forensic Risk Alliance (FRA) as the independent compliance monitor for Binance instead of Sullivan & Cromwell intriguing. The controversy surrounding Sullivan & Cromwell’s handling of the FTX bankruptcy case has raised concerns about the law firm’s ability to effectively monitor another high-profile crypto exchange.
A London-based consulting firm has been selected by the Department of Justice (DOJ) for a three-year monitoring role regarding Binance, according to unnamed sources in a Bloomberg report published on Friday.
In accordance with Binance’s settlement with the Department of Justice (DOJ) this year, the cryptocurrency platform consented to pay a fine amounting to $4.3 billion and designate an independent compliance officer. As part of the arrangement, Binance’s CEO and co-founder, Changpeng “CZ” Zhao, relinquished his position, and received a prison sentence lasting four months.
The DOJ did not respond to CoinDesk’s request for comment by press time.
As a crypto investor, I’ve been following the news about FTX with great interest. In February, investors filed a lawsuit against Sullivan & Cromwell, a law firm that had previously worked for FTX on a project worth around $8.5 million before the exchange’s collapse. The allegations are shocking: not only did they fail to detect the widespread fraud at FTX, but they “actively participated” in it. And to add insult to injury, after FTX went bankrupt, Sullivan & Cromwell were appointed as its bankruptcy counsel – a lucrative job that has netted them nearly $200 million in lawyers fees. I find this situation very disturbing and hope for transparency and justice in the outcome of this lawsuit.
I’ve found that Sullivan & Cromwell have refuted the accusations against them, explaining that their involvement with FTX prior to its bankruptcy was mainly transactional in nature and encompassed a restricted scope of work. Presently, the leadership at FTX, headed by CEO John J. Ray III, has vouched for the validity of Sullivan & Cromwell’s past contributions.
Some opposition arose against Sullivan & Cromwell’s engagement as FTX’s bankruptcy lawyers, with creditors, the US Trustee, and four US Senators voicing their concerns. However, they were granted permission to proceed with the appointment despite the objections.
Based on a recent Bloomberg article, I’m anticipating that Sullivan & Cromwell will continue to be selected by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) for another five-year tenure as Binance’s monitor.
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2024-05-10 22:19