How Michael Lewis's story is shaping FTX industry

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How Michael Lewis's story is shaping FTX industry

You might be surprised to hear about how many people in crypto cite Michael Lewis, the Wall St. bond slinger turned biggest living finance writer, as their favorite author. Crypto is a reforming event for the Church of Capital, a means to clear away periods of bureaucracy, become more personally involved in personal finances and align the world with the established ideals of redistribution, inclusion and equality. And many consider Lewis a Abrahamic figure because of his role exposing the rot at the center of modern finance most notably by his role in exposing the rot at the center of modern finance.

And so if I tell you that Lewis has essentially become persona non-grata within the world of crypto, it's with a heavy heart. Almost overnight, Lewis' reputation as the Virgil of Wall St., the financial crime writer extraordinaire, has tanked - all because of what can only be described as a profoundly ill-advised '60 Minutes' interview on Sunday, which served as the kickoff media event for his latest book.

It should caveat this with a few hugely important details: almost no one outside of publisher Norton or Lewis' circle has read the book, which will be published tomorrow, coinciding with the start of Sam Bankman-Fried's trial, where the fallen magnate is set to plead not guilty to multiple counts of fraud. It's also forgivable that Lewis, like most reporters with direct access to SBF, missed the red flags at FTX. Bankman-Fried was a media phenomenon, a self-made billionaire who stood for capitalism done right - represented by his political donations, charitable commitments and shabby attire.

But Lewis has decided to do what he has chosen to do, with his firsthand account and access to the media, to muddy the waters. Bankman-Fried will be convicted at this time, if convicted, if at all. Bankman-Fried acknowledges his right to his opinion, but there are matters of fact and lines that simply shouldn't be blurred when writing or promoting non-fiction.

As a writer who built a career, making convoluted financial fraud dead simple to miss is bizarre, to say the least. If FTX brings in revenue is not being litigated, and bringing it up again is to miss the massive fraud-shaped hole in FTX's books. It's enough for a CoinDesk editor to ask me, maybe rhetorically, whether Bankman-Fried 'has something' on Lewis. There doesn't have to be an embarrassing photo of Lewis, like, kissing a goat at a Bahamian rave, for this to be a question worth asking.

On '60 Minutes, Lewis notes, he essentially worked as an advisor for FTX, which raises the issue of potential conflicts of interest. To be fair, this was probably informal, and a result of Bankman-Fried's boundless impropriety - Lewis said he met the wunderkind more than a hundred times, speaking for countless hours over two years. But Lewis' theory that he could be a neutral observer is shattered. But others have brought up the possibility that Lewis may have been and could still be financially ensnared in the web of FTX corporate, a tangle of over 100 shell companies and subsidiaries.

Regulatory and financial oddities aside, it's clear that Lewis was always destined to write something that'd spin FTX in the best possible light. Bloomberg's investigative journalist Zeke Faux notes in his recent book how jarring it was to see his literary hero on stage at an FTX-hosted conference in the Bahamas more or less declareing the religiously unkempt Bankman-Fried as capitalism's savior. In a sense, this is the most forgivable of Lewis' perceived crimes against journalism. Bankman-Fried failed in his purported mission, but you can still admire the zeal.

It is one thing to present opinion as fact - like saying FTX would be a going concern if Binance CEO Changpeng Zhao didn't trigger a panic run or that SBF simply made it clear that he didn't notice an 8 billion hole in the balance sheet. Lewis said he was referring to a person willing to take risks mainly to benefit the world.

Effective altruism, Bankman-Fried's propensive motivation, in my opinion, is noble at a small scale and psychopathic when scaled up. Even though it sometimes seems like those in EA are mostly preoccupied with minimizing their taxes, Mosquito nets have been delivered. Lewis seems to be an adherent or at least sees John-Galt- but-charitable as a great protagonist. Life is not a novel by Ayn Rand, and it appears like the writer has been tricked by a Fabulist. The lowest point of the interview was when Lewis parroted the theory that customer funds went missing due to a criss-crossed banking situation to dispel the idea of outright theft.

Considering the circumstances, it appears better to leave the possibility of fraud having been committed to the courts to determine the nature of the fraud. The best defense Bankman-Fried has is that he was profoundly oblivious and that FTX was criminally mismanaged for all intents and purposes, if not actually. That Lewis seems willing to speak up for a frequently'misunderstood' man-child with few other publicdefenders is basically a gamble. What he's wagering is a well-earned reputation.