Crypto news post The Block announced today that its CEO, Michael McCaffrey, has resigned after failing to disclose a series of Alameda Research firm loans from former FTX CEO Sam Bankman-Fried. Axios broke the news for the first time.
The capital was used in part to fund an employee buyout of the company, among other more extracurricular activities.
McCaffrey will be replaced by the company’s chief revenue officer, Bobby Moran, effective immediately, according to a statement. “No one at The Block knew of this financial arrangement other than Mike,” Moran wrote.
McCaffrey confirmed that in a series of tweets Friday: “I did not disclose the loan to anyone. Absolutely no one at The Block was aware of the financial arrangement between my holding company and SBF, including the editorial and research teams. He claims his rationale for this decision was to not “compromise the objectivity” of the coverage surrounding SBF.
The Block was founded in 2018 by Mike Dudas. In 2020, McCaffrey took over as CEO. In April 2021, McCaffrey led the all-investor takeover of The Block, making the company employee-owned, with McCaffrey as the largest shareholder. Even today, he remains the majority shareholder of the company.
Dudas told TechCrunch in an exchange after the news broke that he is “exploring what possibilities, if any, exist to make The Block a trustworthy property.”
Dudas told TechCrunch that at the time of The Block’s sale, his “understanding was that Mike McCaffrey’s family was wealthy and lent him money to buy it back. [his stake] and VCs so the team can assume full independent ownership.
In a TweeterDudas said, “I’d like to buy The Block.”
Media companies must disclose conflicts of interest when they arise; even the appearance of conflict can prove detrimental to a brand, as it can undermine readers’ confidence in its impartiality.
“Mike’s decision to take out a loan from SBF and not release this information demonstrates a serious lack of judgment,” Moran wrote. “This undermines The Block’s reputation and credibility, particularly that of our journalists and researchers, as well as our industry-leading transparency efforts.”
McCaffrey received three loans totaling $43 million from Bankman-Fried/Alameda. The first loan was for $12 million and was used to buy out The Block and make it CEO in 2021. The second was for $15 million in January to fund the operations of the media and data research firm . Finally, earlier this year, McCaffrey was granted a $16 million loan to purchase personal real estate in the Bahamas.
The Block funds its newsroom through a combination of advertising and research. The data section of the post is a tool that TechCrunch uses from time to time.
That the SBF-related capital went into a media company is no surprise; the former web3 mogul has been prolific in his media investments. However, given the lack of disclosure relating to the loans in question, this particular episode is different. Current staff and former executives were exasperated with the dealings, lack of transparency and being lied to by their boss for a long time.