Mike McCaffrey, majority owner of The Block, the authoritative four-year-old crypto information services company, has resigned as CEO following the disclosure that he had secretly obtained $43m in loans from the disgraced crypto entrepreneur Sam Bankman-Fried (SBF). McCaffrey remains the principal shareholder in the company he had acquired in an MBO. The CRO Bobby Moran has now become CEO of the $20m-revenue company.
The following is the text of a tweeted announcement by McCaffrey:
“I have difficult news to share. I am stepping down as The Block’s CEO. While it’s personally painful, it’s the right thing for The Block and the team. Early in 2021, The Block was in a precarious place and I was evaluating whether to sell, merge or restructure. The only option that materialised was to restructure when I was able to obtain a $12m loan for my holding company from SBF in February 2021. In early 2022, there was an additional $15m loan to strengthen the business’s position. I didn’t disclose the loan to anyone. Absolutely no one at The Block (including the editorial and research teams) knew about the financial arrangements between my holding company and SBF.
“My rationale – undoubtedly poor judgment in hindsight – was that knowledge of the loan might be seen to compromise the objectivity of their coverage of SBF and his related entities. I never attempted to influence coverage of FTX, Almeda or SBF. Nevertheless, my decisions undermine the credibility of The Block – and the talented people who work non-stop to cover this complicated and evolving industry. I apologise to my teammates at The Block. I am truly sorry for the lack of judgement. I have full confidence in the team to continue what they do best – delivering clear-eyed research and news in a space that now needs it more than ever.“
The Block was founded in 2018 by Mike Dudas. Mike McCaffrey (who had been an investment banker at Citi) took over as CEO of The Block in 2020 and led an MBO the following year. After his resignation last week, The Block’s editor-in-chief Sarah Kopit said: “In my time, Mike has never had any undue influence on the newsroom. We’ve always been completely independent.”
Founder Dudas is reported to be seeking to “resolve” the company’s future ownership.
Bankman-Fried / SBF, is the founder and former CEO of FTX, a crypto exchange that filed for bankruptcy last month after the disclosure by crypto news site CoinDesk of an “unusually close relationship” with its own trading firm Alameda. He is under arrest in the Bahamas, pending extradition to the US where he faces multiple charges including fraud and money laundering.
Read this: From 12 October 2022: How I do It: Mike McCaffrey, The Block
