Crypto news publication The Block announced today that its CEO, Michael McCaffrey, has resigned after failing to disclose a series of loans from former FTX CEO Sam Bankman-Fried’s Alameda Research firm. Axios was the first to announce the news.
The capital was used in part to fund an employee-led buyout of the company, among other more extracurricular activities.
McCaffrey will be replaced with immediate effect by the company’s Chief Revenue Officer, Bobby Moran, according to a statement. “No one at The Block had any knowledge of this financial arrangement except Mike,” Moran wrote.
McCaffrey confirmed that in a series of tweets Friday: “I have not disclosed the loan to anyone. Absolutely no one at The Block knew about the financial arrangement between my holding company and SBF, including the editorial and research teams.” He claimed his rationale for this decision was not to compromise “the objectivity” of the reporting surrounding SBF.
The Block was founded in 2018 by Mike Dudas. In 2020, McCaffrey took over as CEO. In April 2021, McCaffrey spearheaded a buyout of all The Block investors, making the company employee-owned, with McCaffrey as the largest stakeholder. Even today, he remains the majority shareholder of the company.
Dudas told ExamPaper in an exchange after news broke that he is “examining opportunities to get The Block into reliable ownership.”
Dudas explained to ExamPaper that at the time of the sale of The Block, he had “understood that Mike McCaffrey’s family was wealthy and loaned him money to buy out [his stake] and the VCs, allowing the team to take complete independent ownership.
In a tweetsaid Dudas, “I’d like to buy The Block back.”
Media companies must disclose conflicts of interest when they arise; even the appearance of conflicts can prove detrimental to a brand, as they can undermine readers’ confidence in their impartiality.
“Mike’s decision to take out a loan from SBF and not disclose that information demonstrates a serious lack of judgment,” Moran wrote. “It undermines The Block’s reputation and credibility, especially that of our reporters and investigators, as well as our industry-leading transparency efforts.”
McCaffrey received three loans totaling $43 million from Bankman-Fried/Alameda. The first loan was $12 million and was used to buy out The Block and make him CEO in 2021. The second loan was $15 million in January to fund the media and data research company’s operations. Finally, a $16 million loan was extended to McCaffrey earlier this year to purchase personal real estate in the Bahamas.
The Block funds its newsroom through a combination of advertising and research. The data section of the publication is a resource that ExamPaper uses from time to time.
That SBF-related capital ended up in a media company is no surprise; the former web3 mogul has been prolific in his media investments. However, given the lack of disclosure regarding the loans in question, this particular episode is different. Current staff and former executives were outraged by the transactions, the lack of transparency, and the fact that their leader had actually lied to them over a long period of time.