Michael McCaffrey, the former CEO of the crypto news publisher The Block, resigned today after it was revealed that he 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, according to a blog post released by the company.
Additionally, McCaffrey has resigned from the company’s board. The publication’s reliability has been brought into question by the three loans, which purportedly included a $16 million payout to cover the purchase of a home in the Bahamas for the exiting CEO.
Chief Revenue Officer of The Block Bobby Moran is the new CEO of the company, effective immediately. According to information shared with Axios, Moran is attempting to restructure the business in order to acquire McCaffrey’s controlling shareholding.
The business asserts that McCaffrey was the only individual with knowledge of the loans and that there is “no evidence” that he attempted to influence the newsroom or research team.
In April 2021, The Block’s investors were bought out, becoming the journal employee-owned in its entirety. The startup had raised approximately $4 million from venture capital firms such as Greycroft, BlockTower Capital, Bloomberg Beta, and Pantera in the past. This buyout, however, was financed by a $12 million loan, the first of three provided by the now discredited Alameda Research. The third loan of $16 million was used by McCaffrey to purchase real estate in the Bahamas through a company called Red Sea. The second loan of $15 million provided funding for The Block through a company named Lonely Road.
The fact that a media platform in the crypto sector obtained funding from one of Web3’s most disreputable people and used a major portion of that funding to purchase real estate for personal use is a reputational disaster for both Web3 and The Block. It demonstrates that the ripples from SBF’s dubious business operations in the crypto world continue to spread.
“This news came as both a shock and disappointment to The Block leadership team,” the new CEO Bobby Moran wrote in the company statement. “Mike’s decision to take out a loan from SBF and not disclose that information demonstrates a serious lack of judgment. It undermines The Block’s reputation and credibility, especially that of our reporters and researchers, as well as our efforts at industry-leading transparency.”
Moran continues by asserting that no one on the team was aware of McCaffrey’s loan agreement and that he has seen no evidence that the money influenced the publication’s coverage. Moran stated that he first learned of the loans soon before Thanksgiving of this year.
The Block has a difficult road ahead of it. The publication’s credibility has been severely damaged by its use of off-the-books financials to fund its operations, as well as loans provided by the year’s most notorious crypto criminal. How Moran chooses to advance the company will be important to its continued existence. One thing is certain, however: the full extent of the harm caused by the greed and lack of transparency that led to the demise of FTX and gave the Web3 community a black eye is likely not yet known.
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