Dec 23, 2022 - Economy

What is a $250 million bond?

Illustration of the silhouette of Sam Bankman-Fried crumbling and falling.

Illustration: Brendan Lynch/Axios

Sam Bankman-Fried has been released on a $250 million bond as he faces the fallout of FTX's collapse. But that doesn't mean he has $250 million.

Why it matters: Last month, SBF told Axios Pro's Lucinda Shen that he was down to his last $100,000. But as Thursday's events showed, the economics of bail for rich people can get very complicated — and very bespoke — very quickly.

The big picture: Bankman-Fried has promised to turn up for his next court date. If he doesn't, some unknown group of people, to be finalized by Jan. 5, will be on the hook for $250 million.

  • Among those people: Bankman-Fried's parents, who are putting up their Palo Alto home. That will be forfeited if Bankman-Fried skips bail.

Between the lines: Palo Alto real estate is expensive, but not that expensive. Bankman-Fried is going to have to find other people, collectively worth $250 million or more, who can guarantee his bail.

  • They don't need to put up the whole sum in cash. Instead, they can put up a fraction — maybe 10% — and promise to pay the rest should the accused not show up, leaving them significantly exposed if he doesn't.
  • Given that Bankman-Fried has given up his passport and will be confined to his parents' home while wearing an ankle monitor, the chances of him skipping bail are low.

The bottom line: Bankman-Fried and his parents have some very rich friends. The risk involved is low — but there's no obvious reason why anybody would take that risk at all.

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