The crypto and finance worlds unite — in their ire at Michael Lewis’ SBF stance

Nearly a year on from the collapse of crypto exchange FTX — and on the eve of co-founder Sam Bankman-Fried’s trial — author Michael Lewis has enraged those in finance and crypto alike.

Lewis painted a sympathetic portrait of Sam Bankman-Fried. In an interview on CBS’s 60 Minutes on Sunday, the author made Bankman-Fried out to be an unfortunate Robin Hood who stumbled into the multi-billion-dollar collapse of FTX last year.

“If no one had ever cast aspersions on the business if there hadn’t been a run on customer deposits, they’d still be sitting there making tons of money,” Lewis told CBS. Sam Bankman-Fried — who pleaded not guilty to the charges — genuinely thinks he’s innocent, Lewis added.

Lewis has chronicled Wall Street characters in “Liar’s Poker,” “The Big Short,” and “Flash Boys.” His latest book, “Going Infinite: The Rise and Fall of a New Tycoon,” examines Bankman-Fried and the implosion of the exchange he co-founded.

‘Shocking’

The reaction from the interview “really shows that when it comes to FTX, crypto and traditional finance are really aligned,” Sean Tuffy, a regulation expert and former Citigroup executive, told DL News.

“Overall, the most shocking thing about the Lewis interview to me is that, despite all evidence to the contrary, he still seems to genuinely believe that FTX wasn’t a fraud and was just undone by market rumours,” Tuffy told DL News, referring to Lewis comments that FTX was a good business, ultimately undone by a run on deposits.

The idea that FTX’s collapse wasn’t a fraud doesn’t add up, according to Tuffy, as it is “really hard to square with the fact that four FTX executives have already pleaded guilty.”

Short seller Jim Chanos likened the comments to those of Enron, the energy company he sounded the alarm of fraud on over twenty years ago.

“If it wasn’t for those meddling short-sellers and journalists causing a run-on-the-bank, we would’ve been fine,” Chanos wrote in a post on X, formerly Twitter, making light of the argument.

“This is nonsense, as both FTX and Enron were both massively insolvent, not illiquid,” he said. Insolvency means a company’s overall debt exceeds its total assets, while illiquidity refers to a company which doesn’t have enough liquid assets to cover its current debts.

Crypto natives agree. His comments were branded as “insane,” by Mike Dudas, founder of The Block, while Messari’s Ryan Selkis said he was infuriated by the interview.

Sam-shaped hole

The book is a “kind of letter to the jury,” Lewis said, before adding that there’s going to be a “story war going on in the courtroom” between the prosecution and the defence.

“Neither one of those stories is as good as the story I have,” Lewis said.

“There is still a Sam-Bankman-Fried-shaped hole in the world that now needs filling,” Lewis told 60 Minutes. “For someone driven by their ideals to do good on a large scale.”

Lewis met Sam Bankman-Fried two years ago at the behest of a friend who wanted to invest with him, he took him on a hike in Berkeley Hills California — his jaw was on the floor the entire time.

The freshly minted billionaire surprised Lewis, he had no interest in splurging his money on yachts, he wanted to “spend it to save humanity from extinction,” Lewis noted.

The conversation put him on “red alert”, he didn’t know what it was, but he knew something was going to happen to Sam Bankman-Friend. Lewis asked his he could come and “ride shotgun” with him.

He did just that, following him around for the next two years, which culminated in the multi-billion dollar collapse of FTX and its trading arm Alameda Research last November.

Lewis’s book is slated for release on Tuesday, October 3, the same day Sam Bankman-Fried’s trial will begin.

The one-time Wall Street trader and crypto founder’s charges include securities fraud, wire fraud and money laundering.

Adam Morgan McCarthy is DL News’ London-based Markets Correspondent. Got a tip? Reach out at adam@dlnews.com.