SBF Secretly Funded 'The Block' News Organization: CEO Michael McCaffrey Used Alameda Money to Buy Out Other Investors, Becoming the Majority Shareholder Himself
LLCs controlled by McCaffrey received a total of three loans from Alameda, some of which may be convertible into equity in the company. McCaffrey has resigned as CEO and is leaving the company. McCaffrey remains the majority shareholder.
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.
LLCs controlled by McCaffrey received a total of three loans from Alameda, some of which may be convertible into equity in the company.
Alameda was the trading arm of fraudulent exchange FTX. Both were operated by disgraced founder Sam Bankman-Fried.
McCaffrey used the first loan, for $12 million in April 2021, to fund the buyout of the Block, via an LLC named MJMCCAFFREY LLC.
The second, for $15 million in Jan. 2022, provided capital for the Block via an LLC named Lonely Road.
The third, for $16 million in spring of 2022, went to an LLC named Red Sea that McCaffrey used, in part, to buy a Bahamas apartment.
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.
Moran said McCaffrey first told him about the transactions just before Thanksgiving. He and McCaffrey briefed a few members of the company's senior editorial team earlier this week.
Employees of the company claim that they were not aware of the relationship and that McCaffrey acted alone.