The Department of Justice (DOJ) is reportedly reconsidering selecting a prominent New York law firm to handle a critical assignment related to Binance, due to the firm’s prior work for rival exchange FTX.

As part of a plea agreement resolving anti-money laundering and sanctions violations charges, the DOJ and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) mandated court-ordered oversight for Binance. This oversight, known as a monitorship, would be implemented for three to five years.

Sullivan & Cromwell, the law firm managing FTX’s bankruptcy proceedings, was initially designated as Binance’s independent monitor. This appointment was a stipulation under the $4.3b agreement where Binance acknowledged culpability for infringing upon US money-laundering regulations and trade sanctions.

Further, former federal prosecutor Sharon Cohen Levin, a partner at the firm, was slated to lead the monitorship team.

Conflict Concerns Spark DOJ Review of Binance Monitor

However, Bloomberg reported Tuesday that DOJ officials have raised concerns regarding criticism levied against the law firm due to its prior work for FTX, which was a Binance competitor at one point.

In light of these concerns, the department is evaluating alternative candidates for the monitorship role. Sources told the outlet that FinCEN remains intent on appointing Sullivan & Cromwell.

Sullivan & Cromwell, the DOJ, and FinCEN didn’t return Cryptonews’ request for comment by press time.

Law Firm Faces Fraud Investigation

Sullivan & Cromwell represented the now-defunct crypto exchange prior to its collapse and throughout its Chapter 11 proceedings. The firm subsequently submitted invoices exceeding $170m for its services.

These included locating billions of dollars in assets in order to facilitate creditor recoveries.

In February, FTX investors filed a class-action lawsuit against the law firm, alleging the firm’s complicity in the $8b fraud.

The lawsuit contends that Sullivan & Cromwell’s advisory role to FTX throughout 2021 and 2022 provided it with a unique vantage point. This could have allowed the firm to gain deep insight into the FTX entities’ convoluted organizational structure.

Last month, a US bankruptcy judge authorized Robert J. Cleary, a prosecutor known for his role in the Unabomber case, to investigate potential conflicts of interest held by Sullivan & Cromwell regarding its work with FTX.

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