According to sources, Sam Bankman-Fried’s cryptocurrency trading firm, Alameda Research, has been secretly funding The Block for more than a year. The media outlet claims to cover cryptocurrency news independently.
According to those knowledgeable of the situation, one $16 million payment was made by Alameda to be used in part for purchasing an apartment in the Bahamas for The Block CEO Michael McCaffrey.
The Block’s chief revenue officer Bobby Moran stated on Friday that McCaffrey had resigned as CEO and will also be stepping down from the company’s board.
Moran is expected to assume McCaffrey’s position as CEO and work to restructure The Block in order to acquire McCaffrey’s share of the company. Since April 2021, McCaffrey has been the only board member for The Block. Moran explained that he will join the company board while adding two more seats.
McCaffrey was named CEO of The Block in 2020 after it was created in 2018. The Block became 100% employee-owned in April 2021 after McCaffrey oversaw a buyout of the company’s investors where he became the majority shareholder.
Greycroft, Pantera, BlockTower Capital, and Bloomberg Beta were among the venture capital firms that helped the startup fund nearly $4 million through convertible notes. Ads and subscriptions provide for the majority of The Block’s revenue, which is projected to reach $20 million this year. However, The Block is currently not profitable.
Sources claim that McCaffrey started speaking with Bankman-Fried about a loan to finance The Block’s buyout at the beginning of February 2021. Alameda provided three loans in total for LLCs controlled by McCaffrey.
In April 2021, McCaffrey used the first loan of $12 million to finance the purchase of The Block through an LLC called MJMCCAFFREY LLC. The second loan of $15 million in January 2022 was used to provide capital for The Block and was done through an LLC called Lonely Road. The third loan for $16 million in the spring of 2022 was given to an LLC called Red Sea, which McCaffrey partially used for purchasing the apartment in the Bahamas.
According to sources, Moran has confirmed each transaction while The Block has not yet addressed that it received funding from Alameda or that loans were given to McCaffrey-controlled LLCs.
The Block’s disclosure page reads, “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.”
According to Moran, all of the company’s senior management will remain, and The Block will continue to run and publish stories.