Jim Chanos slams Michael Lewis for parroting language, attributing FTX fall to a bank run

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Jim Chanos slams Michael Lewis for parroting language, attributing FTX fall to a bank run

On Twitter, Jim Chanos slammed Lewis for parroting language, attributing the fall of FTX to a bank run.

On October 1st, author Michael Lewis faced criticism on social media after an interview with 60 Minutes on CBS about FTX founder Sam Bankman-Fried that was widely decried as unjustifiably credulous.

The critics included Jim Chanos, the founder of Kynikos Associates, who has a long and storied history of betting against notorious financial frauds, such as Enron and the Bankrupt German payments giant Wirecard.

In a post on Twitter, Chanos accused Lewis of parroting language attributing the fall of FTX to a bank run.

tfor those meddling short-sellers and journalists causing a run-on-the-bank, we would've been fine. This is nonsense, as both FTX and Enron were both massively insolvent, not illiquid, Chanos said.

Bankman-Fried first blamed the collapse of his crypto empire on a run on customer deposits just days after the group of companies filed for bankruptcy protection in November.

While FTX's fate was partly secured by a $6bn run by customer deposits, a presentation filed in March by Bankman-Fried's former empire had a massive $6.8bn hole in the balance sheets of its associated companies.

To be certain, the appreciation in cryptocurrency prices this year has boosted the value of some of these assets, according to court filings made by the company's attorney.

Bankman-Fried faces charges of wire fraud, securities fraud and money laundering.

CBS aired the 60 Minutes interview with Lewis, who wrote bestselling books such as Liar's Poker, The Big Short, Moneyball and The Blind Side, on October 1, where Lewis shared tidbits from his book about FTX and Bankman-Fried. The author was accused of defendering the erstwhile crypto wunderkind.

Some others, including Chanos, said the firm wasn't just illiquid but insolvent.

A key difference between an illiquid and insolvent firm is that an illiquid firm has substantial assets that can either be sold or utilized as collateral for loans, while an insolvent firm does not.