• Sam Bankman-Fried was released from federal court on Thursday after posting an unprecedented $250 million bond.
• However, the bond was not secured by cash or collateral worth $250 million.
• The bond was secured only by his parents’ home in Palo Alto, California, worth $4 million.
Sam Bankman-Fried was released from federal court on Thursday after posting an unprecedented $250 million bond. This bond was so large that Assistant U.S. Attorney Nicholas Roos described it as the “largest ever” pretrial bond. However, the $250 million bond was far from as it seemed.
In most federal cases, a bail bondsman would charge a fee of 10%-15% of the amount in cash to issue a surety bond or “bail bond”. In Bankman-Fried’s case, this would have been $37.5 million. But this fee was not paid. Instead, Bankman-Fried’s parents promised to pledge their Palo Alto, California home, worth $4 million, as collateral to secure the $250 million bond. This was the only collateral that was pledged.
So, where did the figure $250 million come from? The figure was not derived from any cash or collateral that Bankman-Fried or his parents could provide. Instead, the figure was based on the seriousness of the charges against Bankman-Fried. The higher the bond amount, the more likely it is that the defendant will appear in court due to the significant consequences should the bond be forfeited.
Therefore, the high bond amount of $250 million was set for Bankman-Fried in order to ensure his attendance in court. However, the only collateral that was secured to guarantee the bond was the $4 million Palo Alto home.