Illustration by Alex Castro / The Verge
Sam Bankman-Fried, former CEO of failed crypto exchange FTX, loaned $27 million to Michael McCaffrey, the CEO of crypto publication The Block, to help it stay afloat, according to a Medium post from the site’s chief revenue officer, Bobby Moran. Bankman-Fried also loaned McCaffery $16 million, some of which helped him purchase property in the Bahamas, where FTX is headquartered, according to Axios, which broke the story.
McCaffrey is stepping down from his position today and will be replaced by Moran. Moran writes that McCaffrey kept the funding secret from everyone else in the company until revealing it before Thanksgiving this year.
3/ The loan was to an entity I own and the funds were used to effect the restructuring. In early 2022, there was an additional $15m loan to strengthen the business’s position.
— Mike McCaffrey (@McCaffrMike) December 9, 2022
Bankman-Fried has been no stranger to funding journalistic endeavors, with a number of well-known and public investments. He invested in Semafor, ProPublica, The Intercept, as well as a reporting project from Vox, a site from The Verge’s parent company, Vox Media.
And having funding from within the industry is not, by itself, unusual, although it can put outlets in tricky positions, as we noted about CoinDesk’s report that financially undermined its owner DCG.
According to Moran, taking out a loan from SBF and not disclosing it showed a serious lack of judgment and “undermines The Block’s reputation and credibility, especially that of our reporters and researchers, as well as our efforts at industry-leading transparency.”
In April last year, The Block announced that it had bought out investor stakes, making itself “the only employee-owned firm in crypto research, news and information services.” It’s now been revealed that $12 million of the funds used for the move came from Alameda Research, Bankman-Fried’s investment company. That money, along with the rest of the funds paid over the next year or so, was sent via LLCs owned and controlled by McCafferty, according to Moran.
The Block will keep operating, though its financial future may be stormy. The company is looking to buy out McCaffrey’s ownership, and it’ll obviously no longer be getting money from FTX or Bankman-Fried (the former is currently going through bankruptcy proceedings). The second $15 million loan, made in January 2022, went toward paying for the site’s operations.
In a tweet thread on Friday, McCaffrey said that he “never attempted to influence coverage of FTX, Alameda or SBF” and apologized for his “lack of judgment.” His thread does not address the loan that reportedly went toward the Bahamas property.