CEO Michael McCaffrey bought Bahamas pad with $43M in loans from Sam Bankman-Fried: report
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The chief executive officer of a crypto news site has resigned after he reportedly failed to disclose $43 million in loans from disgraced FTX founder Sam Bankman-Fried — part of which was used to buy himself an apartment in the Bahamas.
Michael McCaffrey stepped down as CEO of The Block last week after news of the loans was first reported by Axios. The Block issued a statement confirming the report.
The Block received three loans from Alameda Research, the hedge fund founded by Bankman-Fried that has been blamed for FTX’s implosion.
The first loan, which was for $12 million, was extended to The Block last year. McCaffrey used the money to buy out other investors and make the company entirely owned by its employees. Soon afterward, McCaffrey, who held a majority stake, took over as CEO, according to Axios.
In January, The Block received another loan — this one for $15 million, which was used to fund the cash-strapped site’s day-to-day operations, Axios reported.
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The third loan for $16 million, was issued in the spring and was used by McCaffrey to buy himself real estate in the Bahamas, according to Axios.
No one at The Block had any knowledge of this financial arrangement besides Mike,” Bobby Moran, The Block’s chief revenue officer who will step into the CEO role, said in a statement.
Last month, FTX filed for Chapter 11 bankruptcy after the company used billions of dollars worth of customer funds to cover losses incurred by Alameda Research. FTX also spent $300 million to buy real estate in the Bahamas.
Journalists at The Block, which was founded in 2018, were stunned when they were informed of the loans.
“My immediate reaction was anger, frustration and concern for all my colleagues,” Moran told Axios.
“Everyone has worked incredibly hard over the years — since before I joined and since I’ve been here — to be fair, accurate and independent in their coverage and thought this would call that into question.”
The collapse of FTX and the role of Bankman-Fried and others has drawn the scrutiny of federal prosecutors and regulators.
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Bankman-Fried is scheduled to testify remotely on Tuesday before Congress.
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Bankman-Fried’s ties to The Block is likely to further call into question the news media’s role in failing to hold the disgraced mogul, who has been the beneficiary of largely positive coverage from mainstream outlets, to account.
“From our own experience, we have seen no evidence that Mike ever sought to improperly influence the newsroom or research teams, particularly in their coverage of SBF, FTX and Alameda Research,” Moran said.
Brian Armstrong, the CEO of FTX competitor Coinbase, last week hit out at mainstream media outlets for being too soft on Bankman-Fried, who has embarked on an apology tour that has included interviews with The New York Times, Bloomberg, ABC’s “Good Morning America,” and other agencies.
Armstrong also called out Rep. Maxine Waters (D-Calif.) for tweeting that the House Financial Services Committee would “welcome” Bankman-Fried’s “participation” in a hearing on FTX’s downfall next week.
“It’s been pretty bizarre to kind of watch the whole thing unfold, primarily because I do feel like mainstream media has given a lot of softball interviews, and even this tweet back and forth with Maxine Waters very politely asking him to attend a hearing, and him politely deferring, it was bizarre,” Armstrong said during an interview with tech newsletter Stratechery published on Thursday.
“I mean, this guy just committed a $10 billion fraud, and why is he getting treated with kid gloves?” Armstrong added. “Compare her tweets about Mark Zuckerberg for instance, who never stole $10 billion from people, whatever you think about the guy.”
Additional Reporting by Thomas Barrabi