The Block CEO Michael McCaffrey reportedly borrowed around $43 million from FTX’s Sam Bankman-Fried in three installments, and he didn’t even inform his employees anything about this transaction.
According to an Axios report, McCaffrey started speaking with Sam Bankman-Fried, aka SBF, about a loan to finance the purchase of The Block’s investors at the beginning of February 2021.
Three loans in total were given to McCaffrey-controlled LLCs by FTXs sister firm Alameda Research, some of which the LLCs may convert into stock in the company.
Through an LLC called MJMCCAFFREY LLC, McCaffrey used the first loan, for $12 million, in April 2021 to pay for the purchase of the Block.
The second, for $15 million in January 2022, gave the Block funding through an LLC called Lonely Road. The third for $16 million was given to an LLC called Red Sea, which McCaffrey partially used to purchase an apartment in the Bahamas.
The Block has never revealed that it got funding from SBF or that loans were given to McCaffrey-controlled LLCs.
The Block’s editorial leadership is reportedly furious that McCaffrey failed to reveal such a deal with Bankman-Fried and Alameda, especially given that they are still reporting the effects of 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.
The Block’s editor-in-chief Sarah Kopit, stated, “I’m proud of the work our journalists have done, especially covering the fallout from the FTX implosion. In my time, Mike has never had any undue influence on the newsroom. We’ve always been completely independent.”
Meanwhile, Sam Bankman-Fried has been arrested by authorities in the Bahamas at the request of the U.S. government. The Royal Bahamas Police Force arrested SBF after receiving official Notification from the U.S. government as it has filed criminal charges against him.
