The Block CEO Michael McCaffrey was revealed today to have secretly borrowed $43 million from Sam Bankman-Fried.
At least $27 million were used to fund the crypto news company.
McCaffrey has resigned.
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Sam Bankman-Fried provided The Block at least $27 million in funding in the last year and a half. It appears that no one at the company was aware of the deal except for CEO Michael McCaffrey.
SBF Funded The Block
The FTX saga keeps taking unexpected turns.
According to a report from Axios, crypto news company The Block benefited from three multi-million dollar loans from former FTX CEO Sam Bankman-Fried over the last year and a half. The loans were directly made to The Block CEO Michael McCaffrey, who appears to have not disclosed them to any other company members.
The report indicates McCaffrey received a first loan of $12 million in April 2021, a second of $15 million in January 2022, and a third of $16 million sometime in spring of 2022. The first two loans were reportedly used to restructure the company and shore up its balance sheet. At least part of the third loan was allegedly funneled for McCaffey to buy property in the Bahamas. McCaffrey himself stated that the first two loans used to “strengthen the business’ position” in a Twitter thread. He did not confirm the existence of a third loan.
McCaffrey announced his resignation as the company’s CEO and sole board member shortly after the publication of the Axios report; he was replaced by former chief revenue officer Bobby Moran. “No one at The Block had any knowledge of this financial arrangement besides Mike,” claimed Moran in a public statement. Moran indicated that McCaffrey only disclosed the loans to him just before November 24. Other company members were made aware of the situation this afternoon during an all-hands meeting.
“Had I known about this, I would have not only called it out and disputed [McCaffrey’s] 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,” said The Block editor-at-large Frank Chaparro. Other members of the company voiced similar feelings.
The terms of the deals between McCaffrey and Bankman-Fried are still unclear. “We have seen no evidence that Mike ever sought to improperly influence the newsroom or research teams, particularly in their coverage of SBF, FTX, and Alameda Research,” said Moran in his statement.
The Block recently published a two-hour long interview between Chaparro and Bankman-Fried. Chaparro was well praised by the crypto community for his stern, unyielding attitude towards the disgraced exchange founder.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.
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