The Block CEO Resigns as Tainted Loan from Bankman-Fried Surfaces

Sam Bankman-Fried has a strong influence on the 'independent' crypto media platform, The Block, as Alameda Research secretly funded the media company, with loans totalling $43 million for the last two years.

As confirmed by The Block, the whereabouts of the loans were only known to the former CEO of the media firm, Michael McCaffrey, who resigned immediately after the source of the tainted loan surfaced on Friday. The Block's Chief Revenue Officer, Bobby Moran, has now taken up the CEO role.

Alameda wrote three loans to private entities controlled by McCaffrey. The first loan of $12 million in April 2021 was used for buying out outside investors of the media firm, making it 100 percent owned by the employees, through an LLC named MJMCCAFFREY LLC.

The second loan of $15 million in January 2022 was provided to the media company via an LLC named Lonely Road, while the third, $16 million in the spring of 2022, was provided to an LLC called Red Sea. Moreover, McCaffrey used the Red Sea for an apartment in the Bahamas.

Except for McCaffrey, no one at The Block knew these loans came from Alameda. The crypto media firm extensively covered the collapse of the FTX empire. However, it said that the loans did not influence its editorial team.

Interestingly, The Block's News Director, Frank Chaparro interviewed Bankman-Fried on a podcast that was published last Monday. Larry Cermak, the Block's VP of Research, also compiled and circulated a list of hundreds of investments made by Alameda that contained two of McCaffrey's LLCs. Cermak later said he did not know the links between the two entities with McCaffrey.

"No one at The Block had any knowledge of this financial arrangement besides Mike," Moran said in a statement. "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."

The Explanation

The Block was founded in 2018, and McCaffrey joined as the CEO in 2020. The company, which primarily generated revenue from advertisements and subscriptions, raised over $4 million from venture capital firms, including Greycroft, Pantera, BlockTower Capital and Bloomberg Beta.

In a Twitter thread, McCaffrey explained that the company was in a "precarious place" and the "only option that materialized" was to restructure with the $2 million loan from Bankman-Fried's Alameda. He strengthened the business with the next $15 million loan but did not mention anything about the last $16 million or the allegations of using it for purchasing the Bahamas' real estate.

3/ The loan was to an entity I own and the funds were used to effect the restructuring. In early 2022, there was an additional $15m loan to strengthen the business’s position.

He further said that he "didn't disclose the loan to anyone" as the knowledge of it could compromise the editorial team's objectivity toward coverage of Bankman-Fried and his entities.

5/ 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.