It has been alleged that Michael McCaffrey, the CEO of The Block, borrowed around $43 million from Sam Bankman-Fried, the CEO of FTX, in three payments. McCaffrey did not tell his staff about this transaction in any way.
According to a story published by Axios, McCaffrey initiated discussions with Sam Bankman-Fried, also known as SBF, in the beginning of February 2021 over a loan that would be used to fund the acquisition of The Block’s investors.
Alameda Research, the sister business of FTX, has provided a total of three loans to McCaffrey-controlled limited liability companies (LLCs), some of which the LLCs may convert into shares in the company.
McCaffrey paid for the acquisition of the Block in April 2021 with the first loan, which was for $12 million and was provided through an LLC that had the name MJMCCAFFREY LLC.
The second deal, for $15 million in January 2022, provided finance for the Block via a limited liability company known as Lonely Road. The third one was for sixteen million dollars and was handed to a limited liability company known as Red Sea. McCaffrey utilized some of this money to buy an apartment in the Bahamas.
The Block has never disclosed the fact that it received funds from SBF or that loans were provided to LLCs owned by the McCaffrey family.
According to reports, the editorial leadership of The Block is incensed that McCaffrey failed to divulge such an agreement with Bankman-Fried and Alameda, particularly in light of the fact that they are currently reporting on the impacts of the FTX collapse.
McCaffrey later confirmed the report tweeting, “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.”
McCaffrey has since stepped down from The Block’s CEO position and Bobby Moran, The Block’s chief revenue officer, took upon the role immediately.
Since April 2021, McCaffrey has been the only board member of the company. Besides adding two more members to the board, Moran announced he would join The Block’s board soon.
“No one at The Block had any knowledge of this financial arrangement besides Mike. From our own experience, 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,” Moran stated.
Sarah Kopit, who serves as the editor-in-chief of The Block, said, “I’m happy of the job our writers have done, particularly reporting the impact from the FTX collapse.” In the period that I’ve been here, I’ve never seen Mike exercising any kind of undue influence inside the newsroom. We’ve always been entirely autonomous.”
In the meanwhile, Sam Bankman-Fried has been detained by police in the Bahamas after a request from the government of the United States. After obtaining formal notification from the United States government that criminal charges had been brought against SBF, the Royal Bahamas Police Force made the decision to place him under arrest.
Compiled by Coinbold