Who will pay SBF's $250 million bail?

Written by: PANews based on decrypt, CNBC, Bloomberg

On December 23, New York Judge Gabriel W. Gorenstein approved FTX founder SBF's bail of $250 million and notified SBF that his next court appearance is scheduled for January 3, 2023.

The news caused an uproar in the crypto community—where did this huge bail come from? Didn't SBF lose billions of dollars and claim that he only had $100,000 in his bank account? Does he still have funds from FTX?

In fact, at least so far, no one has paid any amount for SBF's bail, nor has any cash been provided. In fact, SBF's bail agreement is a "guarantee to appear," committing to adhere to specific restrictions while awaiting trial and to appear in court when the time comes.

Thus, the $250 million is considered a guarantee submitted to the U.S. court for appearance, backed by four individuals, at least one of whom is not a family member of SBF. However, at the time of this writing, only two people have signed this "guaranteed bail agreement," namely SBF's father Allan Joseph Bankman and his mother Barbara Fried. The other two individuals with "substantial" assets also need to sign this guarantee by January 5. According to U.S. federal prosecutors revealed at a New York hearing, this bail is one of the "highest pretrial bails in U.S. history."

According to an anonymous legal expert's analysis, under U.S. law, a "guarantee" does not require prepayment or arrangement of bail; it is merely a written commitment based on the defendant's promise to appear when needed. Therefore, as long as someone guarantees, SBF can be released, which means SBF "skipped" the actual bail process.

However, SBF's actions also carry significant risks, as when relatives or family members sign the bail guarantee, any violation of the bail restrictions or failure to appear in court will affect others, including the co-signers of the guarantee.

According to a leaked screenshot of a bail agreement, SBF's restrictions include wearing an electronic monitoring bracelet, being confined to his parents' home in California, and restrictions on spending, attending business events, and carrying firearms.

If SBF fails to comply with the regulations or does not appear for trial, it will trigger the bail payment, and the first collateral to be liquidated will be SBF's parents' property in Palo Alto. Although the specific value of SBF's parents' property in Silicon Valley is not stated in court documents, Zillow data indicates it is approximately $4 million.

The problem is, $4 million is just a drop in the bucket compared to the $250 million bail; where will SBF's guarantors (including his parents) find the remaining funds? According to Reuters, over the past two years, SBF's parents and FTX executives have purchased properties worth $300 million in the Bahamas, but so far no one knows who is holding these assets.

Additionally, Bloomberg reports that the excess bail of $250 million is more of a means to evade bail, leading to severe financial consequences, and typically only requires about 10% of the assets to support this bail, so in reality, in addition to the value of his parents' house, an additional $21 million in funding support is needed.

Before leaving the courtroom, the judge asked SBF if he understood the consequences of violating the bail agreement, at which point this once-dominant crypto mogul finally spoke a single sentence:

"Yes, I do."