Short seller Jim Chanos slams Michael Lewis for parroting language

Short seller Jim Chanos slams Michael Lewis for parroting language

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 following an interview with 60 Minutes on CBS about FTX founder Sam Bankman-Fried that was widely decried as unjustifiably credulous.

Among the critics was the short seller Jim Chanos, the founder of Kynikos Associates, who has a long and storied history of betting against scandalous financial frauds, such as Enron and the bankrupt German payments giant Wirecard.

Chanos wrote on X, the social-media platform formerly known as Twitter, that Lewis was accused of parroting language attributing the fall of FTX to a bank run.

We would've been fine for those meddling short-sellers and journalists, causing a run-on-the-bank. This is nonsense, as both FTX and Enron were both massively insolvent, not illiquid, said Chanos, who has been connected with the @WallStCynic handle on X.

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

While FTX's fate was partially sealed by a $6.8bn loan from customer deposits, a presentation filed in March as part of the bankruptcy court process showed Bankman-Fried's former empire had a massive $6.8bn hole in its balance sheets.

The value of some of these assets has been increased, according to court filings made by the company's attorney, due to the appreciation in cryptocurrency prices this year.

Bankman-Fried will be charged with wire fraud, securities fraud and money laundering.

CBS aired the 60 Minutes interview with Lewis, author of bestselling books 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 defending the former crypto wunderkind.

Some others, including Chanos, pointed out that the firm was not just illiquid but insolvent.

A significant difference between an illiquid and insolvent company is that an illiquid firm has high-quality assets that it can either sell or use as a collateral for loans, while an insolvent firm does not.