Short-seller Jim Chanos, known for his bearish bets on Enron and Tesla, is facing a lawsuit for alleged misuse of company funds. Tesla CEO Elon Musk used the opportunity to hit back at one of his hardest critics.

The Lawsuit: Chanos’s partner, Conlon Holdings — which invested in Chanos & Co. in 2020 — is suing him for using the company “as a piggy bank” for personal use and to benefit his girlfriend, Bloomberg reported. Chanos & Co. (formerly Kynikos Associates) closed late last year.

According to the lawsuit filed in New York State, Chanos sold a Miami luxury apartment owned by Chanos & Co. for $17.8 million earlier this month without informing Conlon Holdings. Conlon reportedly extended $10 million in loans to Chanos’s company over a decade ago.

The report further alleges that Chanos’s girlfriend, Crystal Conners, acted as the sales agent and could have earned a $540,000 commission.

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“In other words, Chanos not only sold the company's property but did so in a way that he could pay his girlfriend more than half a million dollars of money that did not belong to him,” the plaintiff alleged in the lawsuit.

Chanos has reportedly called the lawsuit “puzzling and baseless” and claims he repaid Conlon’s loan in 2021.

Chanos’s office did not immediately respond to Benzinga’s request for comment.

Musk & Others Pounce: Reacting to the news, Musk simply tweeted, “Interesting.”

Another Tesla influencer and YouTuber noted that Chanos’s fund’s assets under management plummeted from $6 billion in 2008 to $200 million by November 2023. He tweeted, “Never bet against Elon.”

Musk used this opportunity to take another swipe at Chanos: “It’s not just that he would short Tesla, he would also push false stories about Tesla in the media, who performed for him like circus poodles!”

This week, Chanos criticized Musk for creating a separate AI company while promoting Tesla as an AI and robotics company.

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