- A bail bond is an agreement between the defendant and the court to appear for trial or pay an agreed sum of money as punishment for not doing so.
- A bail bond is also known as an appearance bond.
- A bond bail requires collateral. In SBF’s case, his parents had to put up a 10% collateral for the $250 million bond. They chose their Palo Alto house as the collateral.
- If SBF violates any of the court’s requirements, his parents will lose their home.
Disgraced FTX founder Sam Bankman-Fried made headlines again yesterday when he was released from custody after a New York judge granted him a $250 million bail bond – one of the largest in history.
Many were confused about how Bankman-Fried, also known as SBF, managed to secure such a large sum of money. After all, the 30-year-old has said multiple times that he’s down to his last $100,000 after his crypto empire worth billions of dollars spectacularly imploded last month.
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Did SBF again use FTX customer funds to get the necessary $250 million? Or does he have some secret wallets where he still holds millions of dollars?
The answer to both of these questions (or, at least to the first one) is “no.” Let’s see what a bail bond is and who paid it for SBF.
What Is a Bail Bond?
A bail bond is an agreement between a criminal defendant and the court to appear for trial or pay the agreed sum of money as a punishment. In other words, the defendant is not required to pay the full agreed sum to be released from jail. This type of bail bond is also known as an “appearance bond.”
In the case of SBF, he will not only need to appear in court on an agreed date but will also be subject to other requirements like house arrest with electronic monitoring and restrictions on business activities. SBF will need to get the court’s approval before engaging in transactions exceeding $1,000, excluding attorney fees.
If Bankman-Fried fails to follow any of these requirements, only then will he need to pay the $250 million bail. But there’s a catch – it’s not actually SBF who will be holding the bag if he decides to flee or does something crazy. It’s going to be his parents.
SBF’s Parents to the Rescue
While a bail bond doesn’t require any upfront payment in cash, bond signatories do need to put up collateral to legitimize the agreement. The people who signed SBF’s bail bond are his parents, Stanford professors Allan Joseph Bankman and Barbara Fried.
Bankman-Fried’s parents are the only signatories of the bond, though documents state that the bond is guaranteed by four people, of which at least one is not a member of Bankman-Fried’s family.
The collateral SBF’s parents put up is their five-bedroom home in Palo Alto, where SBF is ordered to stay until his trial. While the value of their house is unclear, the court required them to put up a 10% collateral for the bond. SBF’s bail bond is $250 million, which would put the value of the house in California at $25 million, though it’s still unknown.
Again, if SBF violates any of the court’s requirements, his parents are going to lose their house.
Even with Bankman-Fried now at his parent’s house, he’s still facing eight criminal charges, including wire fraud, conspiracy to commit money laundering, and others. If convicted, SBF will face a maximum penalty of 115 years in jail.
On the Flipside
- Crypto Twitter has speculated that SBF parents’ house in Palo Alto is worth nowhere around the $25 million needed.
Why You Should Care
Sam Bankman-Fried’s story has been taking interesting twists and turns as of late. With SBF now at home with his parents, it’s important to understand how bond bails in order not to spread misinformation.
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