Binance Holdings Selects Sullivan & Cromwell as Independent Monitor

Overview

New York-based law firm Sullivan & Cromwell has been chosen as the independent monitor for Binance Holdings following the exchange’s multibillion-dollar settlement with the US government. The firm is expected to oversee Binance’s compliance with its plea agreement and strengthen its anti-money laundering and sanctions programs.

Appointment of Sullivan & Cromwell

Sullivan & Cromwell, known for its expertise in handling complex legal cases, is poised to take on the role of independent monitor for Binance Holdings. The firm’s former federal prosecutor and partner, Sharon Cohen Levin, is set to lead the monitorship team pending official confirmation. The Justice Department is nearing approval of Sullivan & Cromwell for this crucial position, as reported by Bloomberg.

DOJ Imposed Monitorship on Binance

As part of its guilty plea to anti-money laundering and sanctions charges, the Department of Justice (DOJ) and the Treasury’s Financial Crimes Enforcement Network imposed monitorships on Binance. The monitorship durations are set at 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 address deficiencies in its anti-money laundering and sanctions programs.

Role of the Monitor

The appointed monitor will have access to various company data, including records, facilities, and employees, to conduct reviews and provide periodic reports to the government. This oversight is crucial in ensuring Binance’s adherence to compliance standards and addressing past shortcomings. The monitorship is highly lucrative for the involved firms, given the extensive workload associated with overseeing a complex organization like Binance.

Binance’s Compliance Challenges

Binance is tasked with enhancing its compliance program to meet the required standards, including identifying and reporting previously ignored suspicious transactions. The exchange’s founder, Changpeng Zhao, is facing legal repercussions for violating banking laws and is scheduled for sentencing in April, adding to the challenges faced by the company.

Expertise and Measures

Sharon Cohen Levin, known for her expertise in anti-money laundering and sanctions, will play a critical role in leading the monitorship team. Additionally, Binance has taken measures to fortify its global cybersecurity efforts through collaboration with INTERPOL, providing insights into effective strategies and techniques for combating cyber threats.

Regulatory Scrutiny

Besides the DOJ’s enforcement actions, Binance has also faced regulatory scrutiny from other authorities, including the Securities and Exchange Commission (SEC), which initiated an enforcement action against the exchange for alleged sale of unregistered securities in June.