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Michael Lewis Faces Backlash for SBF Defense, Sparks Heated Debate in Crypto Community

Published October 3, 2023 8:31 AM
Teuta Franjkovic
Published October 3, 2023 8:31 AM

Key Takeaways

  • FTX’s defense by American novelist Michael Lewis drew criticism from the cryptocurrency community.
  • Lewis asserted that even if nobody questioned FTX’s operations, the company would still be lucrative.
  • Cryptocurrency attorney John Deaton labeled Lewis as a clown for blaming Binance CEO CZ for FTX’s demise.

Michael Lewis, a well-known American novelist and financial writer, has come under fire from the cryptocurrency community for his remarks regarding the defunct FTX exchange and its founder Sam Bankman-Fried (SBF).

Lewis stated in a recent interview  that FTX has a strong and robust corporate base. In his opinion, the exchange would still be making large profits if no one had questioned FTX’s ability to conduct business and caused a run on customer deposits.

“Not a Ponzi Scheme”

“This isn’t a Ponzi scheme. Like, when you think of a Ponzi scheme, I don’t know, Bernie Madoff, the problem is– there’s no real business there. The dollar coming in is being used to pay the dollar going out. And in this case, they actually had– a great real business. 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,” he stated .

Sean Tuffy, a well-known X user, shared a portion of the interview with the cryptocurrency community and expressed surprise at Lewis’ comment.

As was to be expected, the comment from the American author sparked a huge response from those in the crypto community who thought it defied common sense. Lewis was referred to as a clown by CryptoLaw.us founder John Deaton in response.

Deaton called Lewis a comedian for attributing the alarm about the FTX situation to Changpeng Zhao (CZ), the CEO of Binance. The attorney claimed that Lewis’ assertion that the problems at FTX were caused by the whistleblower rather than the exchange’s illegal behaviour was a serious misrepresentation.

Additionally, Anderson, another commentator, hypothesised that some members of the U.S. Congress would be unhappy with Zhao’s discovery of FTX because they think he ruined their lucrative arrangement with Sam Bankman-Fried (SBF), the founder of FTX.

“I think US Congress members are angry that CZ ruined their cash cow, SBF. If he didn’t say anything, maybe the Ponzi could have continued for a few more months,” Anderson commented.

In addition, other commenters argued that despite the mess the platform had made, it seemed like Michael Lewis received a sizable payment from FTX to promote the exchange.

Intentions of Paying Trump Not to Run For President

Lewis claims that Bankman-Fried considered giving Donald Trump $5 billion in order to convince him not to seek reelection in 2024.

In an interview with CBS News’ 60 Minutes that aired on Sunday, Lewis remarked,  “That only shocks you if you don’t know Sam.” he asserted. and added SBF was considering paying Donald Trump to withdraw from the presidential race. “Like, how much would it take?”

Bankman-Fried believed that Trump “belongs on the list of existential risks,” according to Lewis, who was granted unrestricted access to the disgraced crypto entrepreneur. Bankman-Fried saw Trump as someone who was attempting to subvert democracy.

Furthermore, they negotiated a specific sum in connection with Trump’s decision to boycott the elections.

Lewis went on to say that SBF was keen to support Republican candidates who opposed Trump, even approaching “the most unlikely of allies” in Mitch McConnell, the Republican Senate minority leader, and that “they were still having these conversations when FTX blew up” in November 2022.

Why then did it not occur? Lewis declared that he no longer possessed $5 billion.

Lewis added, “The number that was kicking around when I was talking to Sam about this was $5 billion,” and SBF “was not sure that number came directly from Trump.”

Did SBF Had Something on Lewis?

Most people agree that it is strange for a writer who made a career out of making complex financial deception dead easy, to overlook something so basic.

It is not in dispute whether or not FTX made money, therefore bringing it up would again be to ignore the enormous fraud-shaped hole in FTX’s financial statements (and it is a talking point for the SBF). It’s sufficient for the crypto community to query whether Bankman-Fried “has something” on Lewis, perhaps in a rhetorical manner.

Indeed, Lewis revealed on “60 Minutes” that he basically served as an advisor for FTX, raising the question of possible conflicts of interest.

Fair enough, this was probably unofficial and the consequence of Bankman-Fried’s endless misconduct; Lewis apparently met with the wonderkid more than 100 times and spoke with him for numerous hours over the course of two years.

But Lewis’ capacity to serve as a ‘neutral observer’ comes under scrutiny. Some have raised concerns that Lewis could have been, and might still be, entangled within the intricate web of FTX corporate, a labyrinthine network of over 100 shell companies and subsidiaries, especially in financial terms.

Presenting opinion as fact , such as FTX suggesting it would have remained operational had it not been for Binance CEO Changpeng Zhao’s actions, or SBF asserting he was too financially successful to notice an $8 billion deficit in the balance sheet, is one matter. Bankman-Fried privately acknowledged that his hedge fund, Alameda Research, faced challenges of being unprofitable and illiquid.

Hoping for the best or believing in the goodness of others is another aspect. As Lewis pointed out, the world now awaits an individual like Sam Bankman-Fried, someone willing to take risks for the greater good of society, to step in and fill the void.

Trial Begins Today

The trial for the 31-year-old, who faces accusations of fraud and money laundering, will commence with jury selection on Tuesday and should last over six weeks. If found guilty, SBF could face a life sentence.

Wall Street will watch closely for any potential repercussions affecting the high-profile individuals linked to FTX, as SBF and his legal team, led by Mark Cohen, gear up to mount their defense.

The defunct cryptocurrency empire courted prominent investors including the hedge fund billionaires Izzy Englander and Alan Howard, the huge investment firms Sequoia Capital and Thoma Bravo, and pension funds like the Ontario Teachers’ Pension Plan.

Meanwhile, the company’s founder socialised with some of the most powerful business leaders, public figures, and models in the world, including supermodel Gisele Bündchen, former US president Bill Clinton, and David Solomon of Goldman Sachs.

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