According to a statement on the company’s blog, Michael McCaffrey, the former CEO of crypto news publisher The Block, resigned today after it was revealed that he had failed to disclose a series of loans obtained from Alameda Research, the trading arm of Sam Bankman-FTX, Fried’s to restructure and provide capital to the publication in early 2021. McCaffrey has also left the board of directors for the corporation.
The publication’s veracity has been put into doubt due to the three loans that amounted to $43 million and allegedly included a $16 million payoff to cover the purchase of a condominium in the Bahamas for the departing CEO.
Chief Revenue Officer of The Block, Bobby Moran, has been promoted to the position of Chief Executive Officer. According to information provided to Axios, Moran plans to reorganize the corporation in order to acquire McCaffrey’s controlling interest in the business.
The firm asserts that McCaffrey was the only employee who was aware of the loans and that there is “no evidence” to suggest that he attempted to influence the site’s reporting or research team.
In order to understand why this is significant:
The Block, founded in 2018, is owned entirely by its staff after a buyout in April 2021. Greycroft, BlockTower Capital, Bloomberg Beta, and Pantera were among the VCs that have previously invested in the business, contributing about $4 million in total. However, the acquisition was made possible by the first of three loans totaling $12 million that were provided by the now-infamous Alameda Research. The second loan, for $15 million, went to an LLC named Lonely Road, which in turn provided funding for The Block, and the third loan, for $16 million, went to an LLC called Red Sea, which McCaffrey used to acquire property in the Bahamas.
Reputation-wise, it’s a nightmare for both Web3 and The Block that a media outlet in the crypto realm accepted secret money from one of Web3’s most reviled names (and used a major portion of that funds to buy real estate for personal use). This is another evidence that SBF’s questionable business operations in the cryptocurrency industry have had far-reaching consequences.
The Block’s new CEO, Bobby Moran, expressed astonishment and displeasure in the statement released by the firm. Mike’s poor judgment is on full display in his choice to borrow money from SBF without telling anybody. Because of this, The Block’s attempts to be a leader in openness within our business are hampered, and our reporters and researchers’ reputations are harmed as well.
Moran continues by claiming that no one on the team was aware of McCaffrey’s loan transaction and that he has seen no indication that McCaffrey’s financial investment influenced the publication’s content. According to Moran, he didn’t find out about the loans until the week before Thanksgiving.
Ultimately, The Block has a challenging future. The publication’s credibility took a major hit when it was revealed that it had used loans from the year’s most notorious crypto villain to finance its operations in addition to dealing in off-the-books financials. The future of the firm hinges on Moran’s decisions on its direction. There is still one unassailable fact: the full extent of the harm caused by the greed and lack of openness that defined FTX’s demise and gave a huge black eye to the Web3 community is probably still a ways off.
