Bankman-Fried Secretly Funneled Millions To Crypto Outlet The Block

Topline

Sam Bankman-Fried, the former CEO of the bankrupt cryptocurrency exchange FTX, gave millions in under-the-table loans to crypto news publication the Block, the site disclosed Friday, the latest revelation of just how deep Bankman-Fried’s influence cut — including at the institutions charged with holding Bankman-Fried responsible.

Sam Bankman-Fried testifying before Congress last December.

CQ-Roll Call, Inc via Getty Images

Key Facts

Alameda Research, Bankman-Fried’s personal trading firm, lent a total of $43 million to the Block’s CEO Michael McCaffrey over the last two years, the site says, in deals that undercut the supposedly independent publication’s ability to report on FTX.

The Block reports that the first $12 million went toward McCaffrey buying out investors in the Block, the next $15 million went toward day-to-day operations and the remaining $16 million went toward McCaffrey’s “personal real estate purchase” in the Bahamas, also home to FTX’s headquarters and Bankman-Fried’s penthouse.

McCaffrey was the only Block employee who knew of the arrangement, according to Friday statements from the firm’s editor-at-large Frank Chapparo and new CEO Bobby Moran.

Tangent

Bankman-Fried publicly funded several other media outlets, giving millions of dollars in grants to investigative publications ProPublica and the Intercept, awarding a grant of an undisclosed amount to Vox’s Future Perfect Program and making an undisclosed investment in Semafor as part of the news startup’s inaugural funding round. The Intercept told Newsweek last week it used only $500,000 of Bankman-Fried’s $4 million, while internal communications at ProPublica viewed by Newsweek asserted ProPublica only used a third of its $5 million grant, with each outlet placing the remaining money on hold. Vox says the upcoming project earmarked for Bankman-Fried’s grant is also on pause. Semafor’s CEO Justin B. Smith said last week that Bankman-Fried does not actually hold shares in the company but rather bought what could later turn into an equity stake of less than 10%. Bankman-Fried’s Semafor investment drew the attention of Elon Musk, the world’s wealthiest man and Twitter’s new owner and CEO, last month after the outlet reported Bankman-Fried held a previously undisclosed stake in Twitter. Musk denied the report and retorted: “Semafor is owned by SBF. This is a massive conflict of interest in your reporting. Journalistic integrity is 🗑️.” Semafor has not responded to a request for comment.

Key Background

Once seen as crypto’s unassuming golden boy, public sentiment quickly turned against Bankman-Fried after FTX filed for bankruptcy last month following a series of unsavory and likely illegal business practices. Bankman-Fried also spent millions cozying up to policymakers, donating $39.9 million to Democratic causes this election cycle as well as an undisclosed amount of “dark” contributions to Republicans, while his frequent meetings with federal financial regulators, including with the head of the Commodity Futures Trading Commission, also drew renewed scrutiny after FTX crumbled.

Crucial Quote

“He’s literal scum. He kept every single one of us in the dark,” Chapparo tweeted about McCaffrey on Friday, adding the Block’s employees were only briefed on the matter hours before.

Topline

Key Facts

Tangent

Key Background

Crucial Quote

Further Reading