Short seller Jim Chanos criticizes Michael Lewis’ defense of FTX, comparing it to Enron.
Legendary billionaire short seller Jim Chanos blasted Big Short author Michael Lewis on Sunday for his charitable defense of FTX founder Sam Bankman-Fried (SBF).
On this weekend's episode of CBS' 60 Minutes, Lewis discussed his new book, “Infinite,” in which he tells the story of more than a hundred meetings with the disgraced crypto leader at SBF.
Among other things, Lewis said FTX is “not a Ponzi scheme,” and if it hadn't been for the panic-driven run on customer deposits last November, it would still be “making a lot of money.”
“This was literally a defense of Enron,” Chanos wrote in response to X (Twitter). “‘We'd be fine if it weren't for these short sellers and journalists running on the bank.'”
Chanos is the founder of Kinikos Associates, which focuses exclusively on short selling. In the year He is best known for effectively shorting Enron, a $63.4 billion energy company, in December 2001 after using dubious accounting practices to hide its dire finances.
“This is nonsense,” Chanos added, “because both FTX and Enron were massively bankrupt, not unscrupulous.”
John Ray III, who headed FTX during the restructuring, was responsible for recovering the funds owed by Enron after its collapse.
Yet when he testified before Congress in December, even Ray asserted that FTX's “failure of corporate control” and “lack of reliable financial information” was “unprecedented” in his career.
Lewis has faced criticism from many commentators for misunderstanding the Bankman-Fried crime. “Michael Lewis lost the plot,” YouTube and independent journalist Coffizilla said on Monday. “This 60 Minutes interview is uninterrupted.”
SBF donations
The author also stated that SBF is ready to pay former President Donald Trump $5 billion to avoid running in the next presidential election. “They were still having these conversations when FTX blew up,” Lewis said.
Bankman-Fried is known for making generous donations to politicians and has previously been indicted by the Justice Department for campaign finance violations. That charge was dropped by prosecutors in order to protect “treaty obligations to The Bahamas” under which it was extradited from the executive.
SBF's trial began on Tuesday and he is accused of seven counts of fraud and conspiracy in connection with the exchange's collapse. He will be retried in March 2024 on five other counts of securities fraud, securities fraud and money laundering.
All charges carry a potential sentence of 110 years in prison for Bankman-Fried.
