- Sam Bankman-Fried’s Alameda Research sent three loans totaling $43 million to The Block’s CEO Michael McCaffrey.
- McCaffrey used part of the third loan of $16 million to buy an apartment in the Bahamas.
- The Block’s staff reportedly had no knowledge of the loans.
- McCaffrey resigned hours after the news broke last Friday.
- McCaffrey says his connections to Bankman-Fried did not influence how SBF and related parties were covered.
Disgraced former FTX CEO Sam Bankman-Fried secretly sent millions of dollars to crypto news site The Block CEO Michael McCaffrey last year, a report by Axios revealed on Friday.
According to the report, McCaffrey received three loans from Alameda Research, Bankman-Fried’s now-bankrupt trading firm, to finance a buyout of the company in April 2021, which made the firm fully owned by its employees, with McCaffrey holding a majority stake.
The first $12 million loan was used to finance the buyout. In January 2022, McCaffrey used the second loan of $15 million to provide capital to the company. Interestingly, he used part of the third loan of $16 million to buy an apartment in the Bahamas in the spring of this year.
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McCaffrey didn’t disclose any of the loans to the company’s employees.
McCaffrey announced his departure from the company on Twitter hours after the news broke. He admitted receiving the loans from Bankman-Fried to fund the company’s restructuring but offered no details about the third loan used to purchase real estate.
“I apologize to my teammates at The Block. I am truly sorry for the lack of judgment. I have full confidence in the team to continue what they do best – delivering clear-eyed research and news in a space that now needs it more than ever.”
The Block’s chief revenue officer Bobby Moran has stepped in as the company’s new CEO. He’s reportedly looking at restructuring the media firm again and buying out McCaffrey’s stake.
Editorial Staff Didn’t Know SBF Secretly Funded The Block
The editorial staff of The Block, which claims to be an independent crypto news outlet, reportedly did not know about the loans. McCaffrey also said that “absolutely no one” knew about the secret financing and that it had no influence on reporting quality.
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“My rationale – undoubtedly poor judgment in hindsight – was that knowledge of the loan might be seen to compromise the objectivity of their coverage of SBF and his related entities. I never attempted to influence coverage of FTX, Alameda or SBF. Nevertheless, my decisions undermine the credibility of The Block – and the talented people who work non-stop to cover this complicated and evolving industry.”
Frank Chaparro, editor at large at The Block, said on Twitter he was “absolutely gutted” and that McCaffrey is “literal scum” for keeping “every single one of us in the dark.”
“Had I known about this, I would have not only called it out and disputed his actions, but called for an immediate change in leadership. Putting aside the FTX meltdown, there is no excuse for his deception and disregard for the 160 people who work at The Block.”
Just days before the news broke, Chaparro did an extensive interview with Bankman-Fried, challenging him multiple times.
Larry Cermak, vice president of research at The Block, made a list of all of Alameda’s investments and shared it on Twitter last week. Coincidentally, two of the three loans Alameda gave to McCaffrey are also on the list. Cermak said he wasn’t aware of this.
The Block is said to continue to operate. So far, no high-level employees except the CEO have left the company.
On the Flipside
- While the editorial team claims to have had no knowledge of Bankman-Fried’s involvement in the company, it’s unclear whether it stayed truly independent.
- It’s unclear what Bankman-Fried’s motives for funding The Block were. It’s also unknown what he received in return for the loans.
Why You Should Care
The Block is one of the largest and most respected crypto news sites. The website claims to be independent, but Bankman-Fried’s involvement shows that might not be the case. Investors should always do their own research before deciding where to invest or what to trust.
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