After vanquishing some $30 billion in capital, much of which was essentially laundered through an investment firm that borrowed from -- and then lost -- money from clients, it turns out that SBF may also have been working behind the scenes to prop up his fraudulent crypto-empire.
According to an exclusive report by Axios, "The Block, a media company that says it covers crypto news independently, has been secretly funded for over a year with money funneled to The Block's CEO from the disgraced Sam Bankman-Fried's cryptocurrency trading firm."
"The payments, which employees of The Block were previously unaware of, could undermine the news company's credibility and cast doubt on its coverage of Bankman-Fried, the now-bankrupt FTX and Alameda Research, Bankman-Fried's trading firm," the outlet's report continued.
The report noted that a $16 million funding batch from Alameda was in part utilized to finance the purchase of an apartment in the Bahamas for the media company's CEO, Michael McCaffrey, sources familiar with the transaction told Axios.
"McCaffrey has resigned as CEO and is leaving the company, The Block's chief revenue officer Bobby Moran confirmed to Axios on Friday. McCaffrey is also stepping down from its board," the report said, adding that Moran will be taking over the media company now.
He will also look into restructuring The Block to buy out McCaffrey's stake in the company. Not surprisingly, McCaffrey has been the company's only board member since April 2021. Moran told Axios he plans on joining the board as well and will be adding a pair of new seats.
The company was founded in 2018; McCaffrey became its CEO two years later.
Axios notes further:
- In April 2021, McCaffrey led a buyout of The Block's investors, making the firm 100% owned by its employees, with McCaffrey holding a majority stake.
- The company, which isn't profitable, had previously raised over $4 million across convertible notes from venture firms, including Greycroft, Pantera, BlockTower Capital, and Bloomberg Beta, Axios' Kia Kokalitcheva reported.
- Its revenue, mostly from ads and subscriptions, is expected to be around $20 million this year, a source told Axios.
The report noted that McCaffrey informed Moran about the transactions just ahead of the Thanksgiving holiday, while both of them then briefed some members of the media company's senior editorial team this week.
"My immediate reaction was anger, frustration and concern for all my colleagues," Moran said, according to 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. And that's frustrating."
Sources told Axios that members of the senior editorial team are reportedly furious at McCaffrey for failing to disclose the details of the funding from Bankman-Fried and Alameda, especially as the companies cratered and The Block continued to cover the fallout and other details.
Interestingly, according to the report, "The site's news director Frank Chaparro interviewed Bankman-Fried for the company's podcast on Monday" -- just days before McCaffrey's disclosure.
VP of research Larry Cermak claimed to Axios: "Mike never asked me or anyone in research to cover FTX or SBF in any particular way. Or anyone else, for that matter. We had complete discretion to do our jobs."
"I’m proud of the work our journalists have done, especially covering the fallout from the FTX implosion," added The Block's editor-in-chief Sarah Kopit. "In my time, Mike has never had any undue influence on the newsroom. We’ve always been completely independent."
We have a sneaking suspicion that as Bankman-Fried's crypto empire collapses, there will be a lot more disclosures like these to follow, proving again he's not the impish dummy he is trying to portray in interviews.
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