On the 9th of Dec 2022, Frank Chaparro, the news director for The Block, shared his thoughts on Michael McCaffrey’s collaborations with FTX and Alameda as the CEO of The Block.
1) I'm absolutely gutted by this news, which was briefed to the company this afternoon.
Underpinning my shock are feelings of utter disgust and betrayal by Mike’s actions, greed, lack of disclosure. He's literal scum. He kept every single one of us in the dark. https://t.co/jIZCxtHrfc
— Frank Chaparro (@fintechfrank) December 9, 2022
Frank went on to share his utter disgust and shock at the amount of greed and disclosure driving Michael McCaffrey’s actions. Calling him literal scum.
The block takes its role as the trusted moderator and authoritative voice seriously. Its journalists have built content for those who invest in, work with, make decisions about, or seek to understand the cryptocurrency and digital assets space.
They could only achieve this by delivering objective, impactful, and timely information that users could rely on and trust. Therefore, The Block had to be seen as an independent media outlet, void of any conflicts of interest. That image which The Block’s staff had been building for years was all dashed by the actions of its CEO.
It all started in April 2021, when Michael McCaffrey led a buyout of all Investors, transferring 100% ownership of The Block to its employees, and he had the highest share at the time. Because the company wasn’t profitable then, so it raised $4 million from venture capitalist firms like Pantera, Greycroft, BlockTower Capital, and Bloomberg Beta.
With its revenue coming mostly from Advertisement, it was expected to earn around $20 million this year. But that wasn’t enough for McCaffery, so he reached out to the CEO of FTX and owner of Alameda, Sam Bankman-fried.
He initially collected loans to finance the buyout and did the transactions through his LLCs. these LLCs received a total of 3 separate payments from Alameda. The first was $12 million in April 2021, $15 million in January 2022, and $16 million later in 2022.
What did he use the funds to do?
After financing the buyout, McCaffery buys a house in the Bahamas worth millions of dollars. Then he informed the staff of his actions which led to an uproar. They had just recently been covering the FTX and Alameda situation, and Frank Chaparro was responsible for interviewing SBF.
McCaffery’s ties with Alemeda and FTX made it difficult to appear independent and impartial, as the FTX group has been financing The Block since 2021.
For that reason, Michael McCaffery was asked to resign as CEO to be replaced by Bobby Moran. And The Block would continue to operate as there’s little sign that McCaffery tried to influence Block’s reporting on FTX or Alameda.
