The CEO of a crypto news website resigned after allegedly failing to disclose $43 million in loans from disgraced FTX founder Sam Bankman-Fried, a portion of which was used to purchase a Bahamas apartment.
Michael McCaffrey resigned as CEO of The Block last week after Axios first reported on the loans. The Block confirmed the report with a statement.
The Block received three loans from Alameda Research, the hedge fund established by Bankman-Fried and blamed for FTX’s collapse.
The Block received its first loan, for $12 million, in the previous year. McCaffrey utilized the funds to buy out other investors and transfer full ownership of the company to its employees. According to Axios, McCaffrey, who possessed a controlling shareholding, took over as CEO shortly thereafter.
Bankman-Fried granted approximately $43 million in loans to The Block, a 2018-founded cryptocurrency news website.
Axios claimed that The Block secured another loan in January, this one for $15 million, which was necessary to fund the cash-strapped site’s daily operations.
According to Axios, the third loan for $16 million was approved in the spring and was used by McCaffrey to purchase real estate in the Bahamas.
Mike was the only person at The Block who was aware of this payment arrangement, according to Bobby Moran, The Block’s chief revenue officer and incoming CEO.
FTX filed for Chapter 11 bankruptcy protection last month after using billions of dollars in client funds to offset Alameda Research’s losses. Additionally, FTX spent $300 million purchasing real estate in the Bahamas.
When notified of the loans, the 2018-established The Block’s journalists were astonished.
Moran told Axios, “My instant emotion was rage, annoyance, and concern for all my colleagues.”
“Everyone has worked really hard over the years — before I joined and since I’ve been here — to be fair, truthful, and independent in their coverage, and they feared this would cast doubt on that.”
Federal prosecutors and regulators are investigating the demise of FTX as well as the role of Bankman-Fried and others.
On Tuesday, Bankman-Fried is set to testify remotely before Congress.
Bankman-ties Fried’s to The Block are likely to cast further doubt on the news media’s role in failing to hold the disgraced entrepreneur accountable, who has received generally good coverage from mainstream sites.
“Based on our own observations, there is no evidence that Mike ever attempted to illegally influence the journalism or research teams, particularly with regard to their coverage of SBF, FTX, and Alameda Research,” Moran stated.
The CEO of FTX rival Coinbase, Brian Armstrong, criticized mainstream media outlets last week for being too lenient with Bankman-Fried, who has started on an apology tour that has included interviews with The New York Times, Bloomberg, ABC’s “Good Morning America,” and other agencies.
Rep. Maxine Waters (D-Calif.) tweeted that the House Financial Services Committee would “welcome” Bankman-“presence” Fried’s in next week’s hearing on FTX’s demise.
“I do feel like mainstream media has given a lot of softball interviews, and even this tweet back and forth with Maxine Waters very sweetly asking him to attend a hearing, and him graciously deferring, it was odd,” Armstrong said in a Thursday interview with tech newsletter Stratechery.
This individual just perpetrated a $10 billion fraud, so why is he being treated with kid gloves? Armstrong added. “Compare her comments about Mark Zuckerberg, who never took $10 billion from people, regardless of how you feel about the man, to her tweets about him.”