Michael Lewis slammed for touting FTX's 'money maker'

54
2
Michael Lewis slammed for touting FTX's 'money maker'

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

Lewis vowed to differentiate Sam Bankman-Fried's collapsed crypto empire from the renowned operations of other convicted fraudsters, including Bernie Madoff.

FTX imploded in November and Bankman-Fried's criminal trial begins tomorrow. FTX's high-profile case centers on seven fraud and conspiracy charges alleging that FTX misappropriated billions of dollars in customer funds under his leadership.

Ponzi schemes involve nonexistent companies where investors are paid out in cash from new participants. Although FTX became one of the largest exchanges of crypto, federal prosecutors have called its legacy into question.

When charges were brought against Bankman-Fried last December, prosecutors said his conduct could be traced back to 2019. The year that FTX was established was the year before the exchange's lucrative growth.

The money was commingled with assets at Alameda Research, a sister company to FTX, which covered its losses with customer funds. In total, FTX's shortfall in customer funds was $8 billion.

A month before FTX collapsed, CNBC reported the exchange's purported financial performance in 2021. The report cites internal documents that show that the exchange's revenue grew to just over $1 billion from just $89 million in the year before.

In November, FTX's bankruptcy proceedings painted a different picture. The court filing said that by the end of 2021, FTX and Alameda had accumulated $3.7 billion in operating losses for federal tax purposes.

In late 2022, Bankman-Fried alleged that the exchange finances 'contained a multi-billion-dollar deficit' that resulted from the misappropriation of funds.

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

Prominent crypto influencer Dan Held said it would be'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 yesterday after a steep drop in the currency's native token FTT caused a flurry of customer withdrawals. The exchange pleaded guilty Monday to failing to hold segregated reserves of customer assets.

He added that Bankman-Fried's business was a money maker. Lewis said that it is the 'best business' in crypto because it is able 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.