SBF's '$250M Bond' Incredibly Overstated: No Money Paid, Parents' ~$4M House Only Collateral Posted
News outlets all around the globe reported that Bankman-Fried got out on bail by posting a gargantuan, unprecedented “$250 million bond.” As it turns out, there is less than meets the eye in this “$250 million bond.”
In the typical federal case, a bail bondsman would charge between 10%-15% of the bail amount in cash to issue a surety bond or “bail bond.” In the case of Bankman-Fried’s astronomical bond, 15% of $250 million would be $37.5 million. But, Bankman-Fried did not pay $37.5 million for his bond. No, Bankman-Fried actually paid no cash at all for his “$250 million bond.” Nothing. Zero.
Bankman-Fried’s parents promised to pledge their Palo Alto, California, home as collateral. The Palo Alto home is rumored to be worth $4 million. And that is the full extent of the collateral pledged to guarantee the $250 million bond. No other collateral was posted or promised.
Bankman-Fried was not required to post a conventional bail bond. Instead, Bankman-Fried was simply released from custody on something called a personal recognizance bond. The personal recognizance bond contains Bankman-Fried’s solemn promise (and his parents’ promise) to pay the court $250 million if he fails to show up for trial at the appointed time.