Michael Lewis slammed for touting FTX's collapsed business

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Michael Lewis slammed for touting FTX's collapsed business

Noted author Michael Lewis has been buried under a Crypto Twitter pile-on after he highlighted FTX's ability to generate cash in an interview with CBS' 60 Minutes.

Lewis sought to distinguish Sam Bankman-Fried's collapsed crypto empire from the renowned operations of other convicted fraudsters, such as Bernie Madoff.

Bankman-Fried's criminal trial is scheduled for Monday, which will begin next week. His case is a significant one, involving seven fraud and conspiracy charges, which allege that FTX misappropriated billions of dollars in customer funds under his leadership.

Ponzi schemes offer investors cash that is deposited from new participants in cash, making them a potentially lucrative business. Although FTX was one of the largest exchanges of crypto, federal prosecutors have called its long-lived legacy into question.

Bankman-Fried's case was brought to court in December last year, and prosecutors said that his conduct could be traced back to 2019. When FTX was established in 2000, it was the year the exchange's lucrative growth began.

Customer cash was commingled with assets in Alameda Research, a sister company to FTX, which covered its losses with customer funds. In total, FTX's customer funds fell by 8 billion to $7.2 billion.

months before FTX fell apart, CNBC reported the exchange's purported financial performance in 2021. The journal notes that the exchange's income grew to more than $1 billion, from just $89 million the year before.

In November, FTX's bankruptcy filings depicted a different picture. By 2021, FTX and Alameda had accumulated $3.7 billion in operating losses for federal tax purposes, according to a court filing.

In late 2022, Bankman-Fried said, 'Boasted about FTX's profits' in late 2022, while the exchange finances 'contained a multi-billion-dollar deficiency' that stemmed from the misappropriation of funds.

At the end of the day, Lewis said FTX would'still be sitting there, making tons of money' if 'aspersions' were not cast on FTX's business that caused traders to withdraw their money en masse.

Dan Held, a leading crypto advocate, said it was'shameful' for Lewis to protect Bankman-Fried because exchanges 'are supposed to have 1:1 deposits' and can't handle deposits in the same way as banks-at least legally.

FTX filed for bankruptcy after a steep drop in the exchange's native token, FTT, triggered a flurry of customer withdrawals. It also led the exchange to concede that it did not hold segregated reserves of customer assets.

Lewis said Bankman-Fried's business was a money maker. Lewis said he was the best business for crypto because of its ability to charge transaction fees.

re sitting in the middle of those transactions and you're taking out a tiny fraction of a percentage, there's a lot of money to be made.