February 8, 2023

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Sam Bankman-Fried secretly handed over $27 million to a major crypto news site and its CEO

Sam Bankman-Fried, former CEO of failed crypto exchange FTX, has loaned Michael McCaffrey, CEO of crypto publication The Block, $27 million to help it stay afloat, according to a Medium post by The Chief Website Revenue Officer, Bobby Moran. Bankman-Fried also loaned McCaffery $16 million, some of which helped him buy real estate in the Bahamas, where FTX is headquartered, according to Axios, who turned the story on its head.

McCaffrey is stepping down from his position today and will be replaced by Moran. Moran writes that McCaffrey kept the funding a secret from everyone else at the company until she revealed it before Thanksgiving this year.

Bankman-Fried is no stranger to funding journalistic ventures with a range of well-known and public investments. He has invested in Semafor, ProPublica, The Intercept, as well as a reporting venture at Vox, a website owned by The Verge’s parent company, Vox Media.

And funding from within the industry itself isn’t uncommon, although it can leave outlets in dire straits, as we discovered via CoinDesk’s report, which has financially undermined its owner, DCG.

According to Moran, taking a loan from SBF and failing to disclose it demonstrates a serious lack of judgment and “undermines The Block’s reputation and credibility, particularly that of our reporters and researchers, and our commitment to industry-leading transparency.”

In April of last year, The Block announced that it had bought out investor stakes, making it “the only firm owned by employees in crypto research, news and information services.” It has now been revealed that $12 million of the funds used for the move came from Bankman-Fried’s investment firm, Alameda Research. That money, along with the rest of the funds paid over the next year or so, was sent through LLCs owned and controlled by McCafferty, Moran said.

The block continues to operate, although its financial future could be stormy. The company is attempting to buy out McCaffrey’s property, and it apparently won’t be getting any more money from FTX or Bankman-Fried (the former is currently in bankruptcy proceedings). The second loan, granted in January 2022, was $15 million to fund operations at the site.

in one Tweet thread on Friday, McCaffrey said he “never attempted to influence the reporting of FTX, Alameda or SBF,” and apologized for his “lack of judgment.” His thread doesn’t address the loan that was reportedly made for the Bahamas property.