The DOJ has put on hold its choice to designate Sullivan & Cromwell as Binance‘s independent monitor, expressing apprehensions over the law firm’s past connections with FTX. Sullivan & Cromwell were about to be assigned to ensure Binance adheres to a settlement pertaining to a $4.3 billion penalty for infringing U.S. anti-money laundering laws and sanctions regulations. This responsibility was contingent upon an understanding between the DOJ and FinCEN.
The reason for the delay is that Sullivan & Cromwell has been managing FTX’s legal affairs both prior to and following its bankruptcy in November 2022. This role, along with the law firm’s past connection to FTX, has attracted attention and criticism regarding their ability to ensure compliance. Despite FinCEN’s preference for Sullivan & Cromwell, Department of Justice officials are now considering other potential candidates for the monitorship.
DOJ Reconsiders Sullivan & Cromwell for Binance Monitoring
Sullivan & Cromwell earned more than $170 million in fees during their work with FTX on bankruptcy proceedings, which involved identifying assets valued at billions of dollars. An FTX lawyer had previously assured the bankruptcy court that creditors could expect a full recovery. However, the law firm has encountered legal disputes from FTX customers, and is currently under scrutiny by a bankruptcy investigator regarding their services prior to FTX’s collapse.
Sam Bankman-Fried, one of FTX’s co-founders currently facing a 25-year sentence, mentioned Sullivan & Cromwell among other parties in his defense during recent proceedings. However, Sullivan & Cromwell has stated that their involvement with FTX was minimal. This claim is backed up by the exchange’s new administration. FTX’s current leadership challenges the validity of Bankman-Fried’s allegations against the law firm. The controversy surrounding Sullivan & Cromwell’s connection to FTX has led the Department of Justice to reconsider its role as Binance’s independent monitor.
Monitor’s Responsibilities and Regulatory Compliance
A monitor will be assigned to thoroughly examine Binance’s adherence to regulatory rules. This entails examining internal records and engaging with employees directly to ensure complete conformity with established legal guidelines. The monitor’s role is essential, given the severe consequences Binance faced for past violations of anti-money laundering laws and sanctions regulations.
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2024-04-16 01:39