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Comment by hn_throwaway_99 | Hacker News Reader

Normally when you post bail you have 2 options:

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.

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I was thinking that he just generated a new type of coin that he said was worth $250M and posted that as collateral.

May as well, it worked the first time.

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.

So this bail is as colateralized as an Alameda loan ? This trial is starting well...

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.

Where do you come up with this nonsense?

SBF comments, and some political organizations returning funds. https://www.cnbc.com/2022/12/20/ftx-democrats-senate-majorit...

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.

Cash bail means the accused pays the full bail amount and then gets it refunded after trial.

A surety bond is basically a loan, through a bail bondsman. The bail bondsman has insurance in case you don't show up.

A property bond is where the court gets a lien on your property. It sounds like this is what happened.

https://money.howstuffworks.com/bail.htm

This is a mix of property (the parents home) and sureties (both parents for the full amount, and two other people for a lesser amount).

Sureties don't have to be bail agents / bondsmen.

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)

They're mixed up in political lobbying and fundraising, it's quite possible they are independently and legally if immorally wealthy.

Their son had this crypto exchange that was flinging money in every-which-direction.

Another question, what if they are still paying a mortgage? Then they are “bailing on leverage”? Committing the bank’s home to the US govt.

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.

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.

> 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.

Wait, so his bail is also "funny money"? Did he just FTXed the US government? LOL!

Can't wait to read Levine's take on that.

No I think a lien or similar on a reasonable asset isn't really funny money.

No funnier than money itself really -- both are just bits of paper, backed by some guarantee the government will ensure their value.

>both are just bits of paper, backed by some guarantee the government will ensure their value.

LOL, it really is FTX all over again!

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).

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?

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.

This money is "funny" because:

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.

>You're claiming the court accepted the collateral [...] without doing anything to verify it?

Yes, I think that's exactly what happened.

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.

https://news.bitcoin.com/report-suggests-ftxs-tokenized-stoc...

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.

Why invoke conspiracy, when normal stupidity and corruption will suffice?

I'm not the one invoking conspiracy here.

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.

> 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.

This is all public record in the court documents.

> 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.

I think equivalent collateral to 250 million was posted yes.

Anyone catch the AMC -> APE reverse

Let’s name the FTX tokenized stocks

What APE —> AMC reverse? All I’m seeing is a plan to convert APE to AMC and a reverse split, but I don’t see how that would be relevant here.

Actually governments don't guarantee anything about fiat money value.

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).

It didn't come from anywhere.

From Bloomber:

>"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.

[1] https://archive.vn/QeZy7#selection-4563.0-4563.157

> So if they are required to put down 10%

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.

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