Sullivan & Cromwell In Line for Coveted Binance Watchdog Role

Ava Benny-Morrison, Sabrina Willmer and Allyson Versprille, Bloomberg News

The Binance logo on a laptop arranged in the Brooklyn borough of New York, US, on Wednesday, June 7, 2023. The list of digital tokens deemed as unregistered securities by the Securities and Exchange Commission now spans over $120 billion of crypto after the US agencys lawsuits against Binance Holdings Ltd. and Coinbase Global Inc. Photographer: Gabby Jones/Bloomberg , Bloomberg

(Bloomberg) -- New York law firm Sullivan & Cromwell is poised to be appointed Binance Holdings Ltd.’s independent monitor following the crypto giant’s multibillion-dollar settlement with the US government.

The white-shoe firm is the leading contender for the coveted monitorship, according to people familiar with the selection process, likely beating a crowded field of lawyers and consultants vying for what’s seen as a lucrative watchdog role. Former federal prosecutor and firm partner Sharon Cohen Levin would likely lead the monitorship team, said one of the people, who asked to remain anonymous to discuss the confidential matter.

While the appointment hasn’t been officially signed off on, Sullivan & Cromwell is at the top of the list and the Justice Department is close to approving the firm, one of the people said.

A DOJ spokesperson declined to comment. Binance and Sullivan & Cromwell didn’t respond to requests for comment.

Binance late last year agreed to plead guilty to anti-money laundering and sanctions charges and pay $4.3 billion to settle a yearslong probe led by federal prosecutors and regulators. As part of the crypto trading juggernaut’s plea deal, the Justice Department and Treasury’s Financial Crimes Enforcement Network both imposed monitorships — the first lasting three years and the latter lasting five.

The US government and Binance said they’d “use their best efforts” to select a monitor within 60 business days of executing the Nov. 21 plea agreement. That soft deadline ends on Feb. 20, though sometimes monitors — especially if a company is large and has worked with a lot of law and consulting firms in the past — can take longer to be put in place.

The monitor’s job is to ensure that Binance is complying with its plea agreement and taking steps to address the shortfalls in its anti-money laundering and sanctions programs. The monitor will have access to a wealth of information, including the company’s records, facilities and employees, and is tasked with using that data to conduct reviews and send periodic reports to the government.

Monitorships are lucrative opportunities for firms that land them, especially given the workload that goes into overseeing a company as large and complex as Binance. Over the last several months, many consulting and law firms have been vying for the gig.

Binance has been tasked with a huge undertaking to get its compliance program up to par, including going back to identify and report tens of thousands of suspicious transactions Treasury said the firm willfully ignored in the past. Binance founder Changpeng Zhao also pleaded guilty to violating banking laws and is due to be sentenced in April.

New York-based Sullivan & Cromwell made headlines last year as the firm managing the bankruptcy of FTX — one of Binance’s former top rivals before it collapsed at the end of 2022. The trading empire’s co-founder Sam Bankman-Fried was convicted in November of seven criminal counts, including fraud and conspiracy, for misusing customer funds.

Levin is recognized as an anti-money laundering and sanctions expert, having led the money laundering and asset forfeiture unit at the Manhattan US Attorney’s Office before joining the defense bar. She also previously represented Goldman Sachs in the 1MDB scandal.

--With assistance from Chris Strohm.

(Updates with details of monitorship deadline in sixth paragraph.)