Crypto media The Block secretly paid millions by FTX's Bankman-Fried
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Future CEO Moran confirms that the senior leaders will remain with the media company and the company will operate business as usual.
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Sam Bankman-Fried (Forbes)
According to sources cited by Axios, media company The Block has been secretly receiving funds for the span of over a year being sent to the company's CEO from the disgraced Sam Bankman-Fried's cryptocurrency trading business, Alameda Research.
The funds could pose a risk the company's credibility and jeopardize the validity of the coverage of Bankman-Fried, the bankrupt FTX and Alameda Research. The Block, founded in 2018 and which claims to cover crypto news independently, wasn't aware of the payments before.
Bankman-Fried, before sleeping his company's collapse, was a major donor for the Democrats.
An apartment in the Bahamas for The Block CEO Michael McCaffrey was bought using $16 million of the funds from Alameda. Axios was told by The Block's chief revenue officer Bobby Moran that McCaffrey is leaving his position as CEO, which he has held since 2020, and also the company as a whole.
Moran is expected to replace McCaffrey, who was also the company's only board member since 2021, and confirmed that he intends to reformulate the media company to buy out McCaffrey's share.
Over $4 million was raised by the company in the form of convertible notes (a short-term debt that becomes equity) from firms such as Greycroft, Pantera, BlockTower Capital, and Bloomberg Beta, as reported by Axios' Kia Kokalitcheva.
Accounts on check
The Block is expected to have a total revenue of around $20 million this year, mainly from ads, marketing, and subscriptions.
Three loans from Alameda were transferred to Limited Liability Companies (LLCs) managed under McCaffrey - the first loan, for the amount of $12 million in April 2021, was used to fund the buyout of the company, through an LLC named MJMCCAFFREY LLC. The second amount of $15 million in January 2022 supported The Block with capital through an LLC named Lonely Road. The third loan of $16 million in 2022 was transferred to an LLC named Red Sea to buy the Bahamas apartment.
Moran said he was told by McCaffrey of the transactions in a last-minute scenario, after which they both notified a few members of the company's senior editorial team this week, with Moran expressing: "My immediate reaction was anger, frustration, and concern for all my colleagues,"
"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."
Read more: Binance reveals $1 bil in recovery fund following FTX bankruptcy chaos
VP of Research Larry Cermak provided a list on Tuesday of hundreds of investments made by Alameda, which includes two of the loans sent to McCaffrey's LLCs, but Cermak added that he had no knowledge of the LLCs' connection to McCaffrey.
"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," Cermak said.
The Block's editor-in-chief Sarah Kopit stated: "I’m proud of the work our journalists have done, especially covering the fallout from the FTX implosion," as she continued: "In my time, Mike has never had any undue influence on the newsroom. We’ve always been completely independent."
Financial aid from Bankman-Fried's Alameda Research has not been disclosed by The Block and neither of the loans sent by Alameda to the LLCs, as The Block's disclosure site states: "it is critical that The Block is fully transparent about our own financial holdings so as to avoid any appearance of bias or impropriety. The most valuable asset that we hold and strive to earn again every day is our reader's trust."
Future CEO Moran confirms that the senior leaders will remain with the media company and the company will operate business as usual.
