‘He was released on bail for a $250 million bond — “the largest ever pretrial bond,” apparently — secured only on his parents’ home in Palo Alto, where he will be living.
’SBF will surrender his passport and remain in home confinement with electronic monitoring — he’ll wear a bracelet. He will also be required to undergo regular mental health evaluation and treatment. No financial transactions over $1,000 except legal fees, no new lines of credit, and he can’t start a business. Also, no firearms.
’That is: Sam lost all his money in crypto, and has moved back into his parents’ basement.’
1. Pledge the full amount of the bail yourself. You get this back if the accused shows up in court, you lose it of they flee.
2. Pay some percentage (usually X%) to a bail bondsman. You never get that money back, and if the accused flees, the bail bondsman will try to get the money from whomever signed the bond (as the bail bondsman is on the hook). The bail bondsman may also engage a bounty hunter to try to catch the accused.
Obviously, with a bail amount this large, my guess is there is no bail bondsman that has that much to put up. So there should be $250 million that someone pledged for this bail. I'm still confused as to where that amount came from.
I think bail norms probably vary by jurisdiction, etc., and your assumptions are not correct.
My guess is he was not required to post full collateral, i.e. the only collateral here is the home, and then Sam, his parents, and two others posted essentially an unsecured guarantee for the full $250M, such that the government could recover up that amount from any assets held by any of those parties. While unsecured, note that the government probably has priority over any creditors and could and would seize any assets of those parties per the guarantee.
They require it is legal tender so guarantee it has value as a medium for exchange and storage.
I didn't say the government guarantees a particular value. I said it is backed by a government guarantee, and that is what ensures it has value (i.e., it is worth what is written).
Do you not understand the concept of a secured promise or bond? These things have been around long before crypto, before money was funny, and possibly before money at all. The entire finance, banking, and trading and contract systems of the modern world are built around this.
The reason FTX was a scam is not because they weren't sending gold bars to investors.
I think the issue, though, is that nobody put up anywhere near $250 million to secure the bond (at least from my read of it).
This is one of the rare instances where general population outrage at this deal (read the NYTimes comments) is warranted. There are tons of poor folks who sit around wasting in jail, waiting for their trial, because they can't make bail. But this appears to be the case where the bail is "nominally" $250 million, but nobody had to guarantee that with reasonably equivalent collateral. I could be misunderstanding what collateral was put up, but the only thing that was mentioned was his parents house (which even in Palo Alto isn't $250 million).
You are correct. The parent’s home plus some assets of two other individuals probably totaling a max of $5 million but nowhere close to $250 million - which was a stupid amount to set in the first place. Either require a reasonable bond amount or deny bail.
I never claimed that rich and poor were equal under the justice system, just that the court seems to consider the loan (edit: bond) to be secured. It sounded like there was more on the line than just the house, didn't it?
FTX said: "Don't worry we have collateral ... lol jk!"
SBF's parents said: "Don't worry we have collateral ... lol jk!(?)"
Your bit about "but fiat isn't real either" is true to some extent, and you could even go deeper and argue that nothing is real because we don't know if the universe is real or whatever. But honestly, in a practical context, there's a huge difference between:
I have 100 million in the bank; source: bank statement.
and
I think I have 100 million in the bank; source: trust me.
You're claiming the court accepted the collateral from the parents and these two other allegedly wealthy "individuals" without doing anything to verify it?
If that is what happened then you are right about it being funny money, and hilarious that they duped the court like they did their investors.
The simplest explanation is usually true. A billionaire enabler of Sam's was willing to put up $250M in collateral because Sam spilling on him would cost him far more that $250M. I think the claim he was acting alone solely on his own behalf is absolute garbage. He rose too high, and too rapidly to have been solely of his own creation. Someone bigger than him was absolutely involved.
I think we need to look further into FTX's Tokenized Stock Offerings, as that's what the SEC has been honing in upon, among other things.
FTX was selling stock, claiming it to be backed 1:1, which was likely being used as collateral for further speculation, or as locates for short sales, despite never actually holding the shares they claimed to.
Crypto is unregulated and is a whole thing, but claiming to have stocks you don't have is a way to really piss off the ultra-rich.
> A billionaire enabler of Sam's was willing to put up $250M in collateral
No one put up collateral beyond his parents home, and only SBF and his parents are on the hookfor the full $250M, the other two sureties are exposed for a smaller amount.
> The simplest explanation is usually true. A billionaire enabler of Sam's was willing to put up $250M in collateral because Sam spilling on him would cost him far more that $250M.
But whether SBF is out on bail doesn't affect what comes out at trial. If you're saying that SBF is effectively extorting those other individuals, on threat of revealing their secrets, then their pretty dumb extortion victims, since nothing stops SBF from continuing to demand massive investments of their money such as this one.
SBF has been charged with the following crimes in a U.S. federal court.
Conspiracy to commit wire fraud on customers
Wire fraud on customers
Conspiracy to commit wire fraud on lenders
Wire fraud on lenders
Conspiracy to commit commodities fraud
Conspiracy to commit securities fraud
Conspiracy to commit money laundering
Conspiracy to defraud the United States and violate the campaign finance law.
With the limited information we currently have, to assume that he is the biggest player in this and that him, Ellison, and Wang were the only ones involved is naive at best. The discovery process for these cases will be extremely interesting.
> My guess is he was not required to post full collateral, i.e. the only collateral here is the home, and then Sam, his parents, and two others posted essentially an unsecured guarantee for the full $250M, such that the government could recover up that amount from any assets held by any of those parties
Approximately this, though only SBF and his parents are on the hook for the full amount, the other two for a lesser amount (TBD in the main bail doc.)
Sam probably has access to a ton of FTT. He can open a trading desk in his parent's basement and recover at least a few hundred USD. He's very bad at gambling, but if he can find a new shitcoin to arbitrage, he can leverage his FTT to new heights and be back at the top! It will be from prison, however.
He probably has access to the several hundred million dollars worth of crypto stolen from FTX wallets around the time of the collapse, but he also probably doesn’t want to show that he does.
If that's the case, I'm very curious now about how two Stanford professors have at least 250M of property under their name. Perhaps it has been acquired in the past 4 or so years?
(Nothing against Stanford or professors, but academia pay peanuts and professors are usually very far from having a net worth of 9-10 figures, faaaaaaaar awaaaaaay)
Law professors make much better money than most academics, with starting salaries more than double what humanities professors make. These are also senior professors who have been at Stanford for a long time, making good money and presumably investing along the way. SBF's dad is a famous tax law professor (he 'wrote the book' on federal income taxation that's used at law schools all over the country), so he understands finance/investing better than most academics.
I would guess that their net worth was north of $10M just based on those earnings, subsequent investment, and their house (which is apparently worth $3M+).
Of course, SBF has had some incredible arbitrage wins over the years, and he presumably offered his parents the opportunity to run a million or two through his money making machine. If they were more conservative with their gains that he was, they could easily have $20 or $50 million. I agree it's unlikely that they have 10 figures, though.
This isn't super relevant, but academia in the US pays very well. This is even more so the case for law, business, engineering, medicine, and a few other areas.
Obviously not relevant in the context of $250 million.
I doubt there will be a trial, as too many politicians could be deposed along with tracing washed funds from US to Ukraine to FTX. He will have an unexpected medical complication or will take a plea deal.
Without a trial and witnesses testifying, most shenanigans will remain unknown. This is why the odds favor he takes a plea or has an unexpected medical issue.
>"FTX co-founder Sam Bankman-Fried’s $250 million bail package is one of the largest in US history, but it doesn’t mean he actually has to put up that kind of money.
At Bankman-Fried’s bail hearing on Thursday in federal court in Manhattan, both the prosecution and defense agreed that the former billionaire’s assets have “diminished significantly.” Bankman-Fried has said he may have only $100,000."[1]
>"The $250 million personal recognizance bond approved by the judge was secured by the equity in Bankman-Fried’s parents home in Palo Alto, California, which is almost certainly not worth anywhere near that amount. But outsized bonds are more a means of establishing harsh financial consequences for bail-jumping and are often backed by assets worth only around 10% of the stated amount."[1]
Further:
>"In addition to Bankman-Fried and his parents, the bond must be signed by two other people of “considerable means,” one of whom can’t be a relative, by Jan. 5"[1]
So it sounds like he able to leave today with nothing more than the equity in his parents house pledged and now has until the 5th of the new year to find the other non-family signatory as well as the rest of the funding. I've read in multiple sources that his parents house appraised somewhat recently at $4 million, so that max equity they could have would be that. So if they are required to put down 10% that still means they need to find another 21 million dollars somewhere.
They aren't. The parents as surety for the full amount, the security claim on the home, and the two additional sureties for a smaller amount TBD are the approved requirements for the bond.
If the prosecution had any qualms about those posting bail on SBF's behalf, they could ask for a surety hearing in order to ascertain where the funds are actually coming from, and that they're legit.
Note: Even though the Federal Bail Reform Act of 1984 allows Federal courts to require financial conditions such as a cash or property bond, the majority of districts no longer use bail bonds, and very few bondsmen will work with federal cases.
> This part is incorrect - his parents and 2 other individuals with ‘significant assets’ signed on his bond.
Yes, they stand surety, but only the home secures the bond. (That is, the court has—or will have, their is time to post it—a recorded legal property interest in the home until the bail is no longer needed.)
Well, known by who? More of them are known to journalists and Google than to a proverbial person on the street, but there are supposed to be over 3,000 billionaires in the world.
We probably haven't heard of most of the 99% of billionaires that aren't in the top ten. And if we haven't heard of them, it would not make a lot of sense to be certain that "it is known" of all of them where they got their wealth.
Last year, if you didn't Google them, did you know who Bernard Arnault, Mukesh Ambani, or Gautam Adani were? In the case of Adani, I had never heard even of his company, which apparently is one of the largest in the world.
(The point of this post was mainly to use the phrase "99% of billionaires")
His parents' home isn't worth anything like that. Does that mean only a fraction of the bond value needs to be the security? If so, is that not bullshit?
Normally, the accused pays a bail bondsman ~10% of the bail amount and bondsman puts up the full amount at the courthouse. The 10% is a fee to the bondsman, the accused doesn’t get it back. The bondsman gets back their full amount back when the accused shows up for trial. If the accused flees, the bondsman sends bounty hunters and/or calls in their insurance policy.
Not sure how it works for amounts this large, but the above applies to your everyday DUI/assault/etc (at least here in VA). And even if the house was worth $25 million, they would essentially be giving it to the bondsman, which I doubt it what happened.
The rich truly do play by different rules, even when they’re charged with crimes.
thanks. who pays if he and the parents skip the US to somewhere from which they're not retrievable, and their house sells for a very presumptive 4 million?
SBF and his parents are on the hook for the full amount, two other sureties for lesser amounts.
Personally fleeing doesn't really matter, because signing as a bail surety makes the court itself your agent for service of process, and default judgement is automatically available. (They do have to provide a copy of notices at the sureties last known address, but they don't have to actually serve notice on them.)
Now, if all the assets of SBF and his sureties are out of reach of the US government, that would be a problem.
With that level of living, he must have always had a few millions lying around, I wonder how it’s possible to come back to limit expenses to two or three thousand dollars a month, like the rest of us.
I realize that it's easy to reach the forgone conclusion that yes, he's guilty and a criminal. You'd have to really tie yourself into knots to find out how he could be innocent. But our legal system still treats people not yet convicted as....not yet convicted.
Speaking more generically, people released on bond need to be able to have the resources necessary to form a proper defense, and also to try and avoid their entire life being destroyed by an arrest that may or may not lead to a conviction.
Normally, I agree. However, considering the statements from current CEO John J. Ray III and two guilty pleas from insiders, it is hard to believe he is innocent. In the digital era, wire fraud is so simple to prove and can carry huge jail sentences. Honestly, I wonder if he will also plead guilty. The evidence against him looks enormous. Even with a guilty plea, I expect 10-20 years jail sentence and all assets seized.
What would this achieve? I think SBF has done a load of financial crime, but I don’t think we are at risk of him spinning up a new token and making millions. Internet is required for a lot of normal shit, making it illegal is a really cruel punitive thing
I don’t know about cruel, he’s just preparing for a significant legal defense. Communications, researching, etc using the internet is an important part of defending himself in court which he deserves a fair shot at. The purpose of the bail is to enable him to better participate in the upcoming legal proceedings.
I'm all for getting to the bottom of what SBF did, but he hasn't been convicted of any crime yet. It's important that we go through the process before applying punishments.
I think if his suggested crime involved use of the internet, there's a case for withholding internet from him. Hard to supervise that at a family home, however.
Cruel might be a bit of a stretch. He can read and do some sketching. Bit of home maintenance. Have a crafternoon or two.
If we only permitted accused criminals to have public defendants, instead of being able to hire expensive lawyers, I expect that improving the public defense system would magically become a priority for everyone, or at least, for half of the legal profession. If we got rid of TSA-precheck, I would expect some of the bullshit that regular travelers have to go through would be eliminated.
It's pretty easy for people with power and influence to not give a shit about what the rest of us have to deal with, when they never need to experience it.
> If we got rid of TSA-precheck, I would expect some of the bullshit that regular travelers have to go through would be eliminated.
It's pretty easy for people with power and influence to not give a shit about what the rest of us have to deal with, when they never need to experience it.
I must admit: if TSA pre-check is an example of what people with power & influence get away with, then I can simply not be convinced of your case.
That has not been proven. He hasn’t had a trial yet. Maybe you are unfamiliar with the US justice system, but at least in principle the idea is to only punish after someone has been found guilty.
Not really, my thought is any kind of bail jumping or favor calling in, or attempts at covering up evidence would be done on the internet. It's to preserve the effectiveness of the trial, not just some arbitrary punishment.
> on bail for a $250 million bond — secured only on his parents’ home in Palo Alto
Wait what? How does that work? I thought if the bond was $X, that literally means you either (a) give the court $X, cash only or (b) sit in jail until trial.
How can his bond be set at $250 million, yet the court somehow isn't just making him sit in jail until and unless he either goes to trial and is found not guilty, or he coughs up $250 million?
A financial intermediary trusted by the court pledges to pay the court the 250M if SBF flees and the intermediary cannot find him and take him back into custody.
For typical bail amounts i.e., $50k, the intermediary usually demands 10% of the $50k from the defendant (and his friends) as a deposit, but maybe SBF found an intermediary willing to make the pledge to the court for a deposit significantly less than 10% of the 250M.
Okay so it's basically a bail bond, sign over the $2M house to get the bondsman to post $250M bond.
What bondsman has $250M? Even if they did, why would they ever agree to this?
Isn't getting $2M from a defendant on a bail bond less than even the interest you could probably get by just putting your $250M in, say, a Treasury bond over the same timeframe?
For that matter, who's willing to bet $250M at 99-to-1 payout odds that a smart guy like SBF won't be able to disappear and pop up in Dubai or somewhere with no extradition to the US? (Remember SBF probably had the means, motive, opportunity and moral character to siphon a couple hundred million worth of BTC into a wallet there are no records of. And he knew for a long time FTX was going to collapse and he was probably being investigated.)
> sign over the $2M house to get the bondsman to post $250M bond.
No, there is no bondsman, the house is pledged directly to the court as security, his parents are additional surety for the $250M, and two other people are signing lesser bonds.
How exactly are his parents able to provide a surety for $250M? Do they have assets worth that much? If not, what's even the point of setting bail at $250M, if you only need to put up $4M in collateral?
Why does he get to do this, while someone with a $50,000 bail has to either put up the entire cash amount, or pay 10% in interest to a bondsman?
The court must be convinced that the parties involved are good for it or they would not have accepted the surety. The point of bail is just to ensure you show up to court, not to collect a windfall of profit for the state.
So what happens if SBF disappears? Do the parents lose their $2M house? Lose their $2M house and become $248M in debt? Go to jail?
What keeps the whole family from simply going on a sudden vacation to Dubai and letting the court take their house? Losing one's childhood home is sad, but stolen Bitcoins can still buy a very nice replacement.
His parents are reported to have a $16M Bahamas property in their names, so they can just go to the other houses they bought with funds from their college professor salaries.
People say this kind of thing all the time but I'm yet to see an internet scammer get their comeuppance. That includes people who have been identified after running exit scamming darknet markets. My guess would be that when it comes to online fraud, people are more willing to swallow it because it doesn't seem so real.
Any one of those I guess. I'm not going to make that call, Interpol has a warrant out and nothing happened as a result of that so if she's hiding she's very good at it (which may well include plastic surgery) and if she's dead she did in fact get her comeuppance and then some.
> maybe SBF found an intermediary who'd take significently less than 10% of the 250M.
The amount is large enough that even with 1% or 0.1% they could probably pay a professional bounty hunter to tail him for a week, reducing the odds of him escaping.
> I thought if the bond was $X, that literally means you either (a) give the court $X, cash only or (b) sit in jail until trial.
The simple answer is that you are wrong, that's not how bail and bail bonds work, and its much more complicated than that. Essentially, money bail is a pre-declared failure to appear penalty, and bond is whatever the court accepts as a sufficient promise to pay, which can include purchasing a contract from an official bail agent, having other individuals agree to be on the hook for payment, providing somr property to the court, either physically or a legal claim that allows them to seize it for nonpayment, or a combination of these.
Consider Joe Average defendant whose bail is set at $25,000 bail. If Joe tells the judge "Your Honor, I'll sign a paper that says I'll be $25,000 in debt if I don't show up, but my family can only come up with $200 right now" the judge will probably tell him to pound sand and sit in jail until trial.
If SBF tells the judge "Your Honor, I'll sign a paper that says I'll be $250M in debt if I don't show up, but my family can only come up with $2M right now" why did the judge agree and let him out?
What's the fundamental difference, besides just the number of zeros?
You missed the part where the defendant's lawyers provide the court the necessary evidence to convince the court that the total value of the bond is available to be confiscated if the defendant doesn't show. Which would apply in both cases you mentioned.
> Do his backers get the bond money back if he does show up and the process runs without any hiccups?
There is no “bond money”. The $250M he and his parent signed for, including the lesser amount the other sureties are also on the hook for, doesn’t get collected by the court unless their is a failure to appear. The security interest in the home is the only thing actually transferred.
Wouldn't it be interesting if the people who secured the other part of his bail bond are all rich individuals holding all of their net worth in crypto?
If you search "palo alto basement remodel" you'll find a heck of a lot of contractor / services pages (enough to frustrate me looking for actual news coverage or mentions).
And a Crescent Park remodel involving basements across four properties:
They do if you spend enough money. I met someone who was related to an executive of Intel and they had a basement with dumb waiter and a laundry chute from the other floors.
There's practically no basements in residences in lots of Texas. In Houston a lot of the city is literally only 10-15ft above sea level, the water line is often close to the surface. Coupled with lots of rain and flooding, it's not a good idea. Then in North Texas, expansive soils are then a challenge. There's lots of shifts from drought to wet seasons that'll quickly start crushing those walls.
It's definitely possible to have basements, but it's something only the exceptionally wealthy would even bother with.
I’ve seen some in older homes and have heard “there are no basements in Texas” when I lived there. Same thing in Oklahoma, even though a house I lived in as child had one and we definitely weren’t wealthy. :)
Basements or crawl spaces? Older homes were often pier and beam construction which would have a crawl space. But most houses aren't pier and beam these days they've been pretty much all slab style since at least the 50s.
There's tons of basements in Oklahoma, you're starting to get out of the expansive soil areas I was talking about at that point. You're then also needing to worry about the frost line so your foundations would need to be deeper anyways.
I mean, don't get me wrong, you can build a basement anywhere. Its not like the ground is truly impermeable. Its really just a question of if its worth the maintenance or not depending on the terrain around. If you're going to have your sump pump constantly run because your basement is below the water line, you're going to have a bad time. If you've got expansive soils that'll constantly be changing the direction of load on your basement walls, you're going to have a bad time. Coupled with the fact you don't need to dig that deep to get deeper than the frost line, its usually just really not worth it. So its not that they can't be built, they just can't be built economically.
Really wealthy people in Texas might have a basement; its not impossible! Some really old homes before slab-style construction might have basements as well. Or they might be living in the high deserts out in West Texas. But like easily 99.9% of homes built in the majority of Texas do not have basements. If I were to ask everyone I know if they knew anyone who had a basement at any time in any home they ever lived in, the answer would probably be "no" almost every time. Finding a home built since the 1940's in this area that's less than $10M with a basement is practically finding a unicorn. Except its an expensive unicorn needing constant maintenance.
Not sure about the rest of the state but definitely no basements here in South Florida. I haven’t even seen any houses w a crawl space when I was moving here. Pretty much just concrete block construction on slab. Can’t really dig far on a swamp…
I guess you guys have some firmer land up there. Here if it isn't pure swamp, its limestone which water has no problem passing through, hence no basements in most locations.
‘He was released on bail for a $250 million bond — “the largest ever pretrial bond,” apparently — secured only on his parents’ home in Palo Alto, where he will be living.
’SBF will surrender his passport and remain in home confinement with electronic monitoring — he’ll wear a bracelet. He will also be required to undergo regular mental health evaluation and treatment. No financial transactions over $1,000 except legal fees, no new lines of credit, and he can’t start a business. Also, no firearms.
’That is: Sam lost all his money in crypto, and has moved back into his parents’ basement.’
https://davidgerard.co.uk/blockchain/2022/12/22/ftx-sam-bank...