Jim Chanos slams Michael Lewis for parroting language on FTX

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Jim Chanos slams Michael Lewis for parroting language on FTX

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

On October 1, 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 criticisms was the short seller Jim Chanos, who has a long and storied history betting against renowned financial frauds, such as Enron and Bankrupt German payments giant Wirecard.

In a post on X, Chanos slammed Lewis for parroting language, attributing the loss of FTX to a bank run.

We would've been fine for those meddling short salesellers 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, said Chanos, who has long been associated with the @WallStCynic handle on X.

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

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

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 - author of bestselling novels Liar's Poker, The Big Short, Moneyball and The Blind Side - on 1 October, where Lewis shared tidbits from his book about FTX and Bankman-Fried. The author was accused of defending the erstwhile crypto wunderkind.

Some others, including Chanos, said the firm was not just illiquid but insolvent.

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