Deposit for FTX founders: buy your ransom without money – economy
Sam Bankman-Fried has rarely been seen like this. In the photos that went around the world on Thursday, it looks as if the founder of the insolvent crypto platform FTX had dressed up for his extradition to the USA: suit and white shirt, unshaven and without a tie, but in the Workwear for bankers, lawyers and financial professionals – instead of t-shirts and shorts as usual. In his home country, the 30-year-old is awaiting a mega-trial, it is about alleged fraud of over 1.8 billion dollars and above all the question of whether he has customer funds with his group of companies based in the Bahamas stole and misused.
The allegations would easily be enough to put him in jail pending and during the court hearing. He stays in custody now spared, by posting bail of a staggering $250 million. Until his trial, he is under house arrest at his parents’ home in Palo Alto, the geographic heart of California’s tech industry. The houses there are expensive, of course, the parents are both professors at the elite Stanford University, so the Bankman family is presumably very wealthy. But $250 million?
Even if it were a stately mansion: the house deposited as collateral in Silicon Valley would not be worth that much. And in the Manhattan federal court hearing on Thursday, prosecutors and defense agreed that the former billionaire’s fortune “shrunk significantly” as a result of the FTX bankruptcy. Sam Bankman-Fried said he may have as little as $100,000 left.
In the USA, the deposit does not have to be paid in full
Of the fallen crypto star could never afford the bail, one of the highest ever imposed in the United States. He doesn’t have to. Because the bails, which often seem exaggeratedly high, are one of the many peculiarities of criminal justice in the USA. They also do not have to be deposited in full, unlike in Germany, for example (think of ex-Wirecard boss Markus Braun, who returned in summer 2020 for a payment of five million euros had been released). Rather, they correspond to a bond and are intended to threaten severe financial consequences if a defendant skips his trial. The amount of bail also depends on the seriousness of the crime. US Attorney Nicholas Roos said in court: “Mr. Bankman-Fried committed fraud of epic proportions.”
In many cases, US bail bonds are only backed by assets worth about a tenth of the declared amount. In Bankman-Fried’s case, that would be 25 million euros, which seems realistic given the house and property in Palo Alto and the fortunes of Stanford professors. He also needs signatures from two other people, one of whom must not be related to him. This has given rise to an entire industry, with commercial guarantors taking over the bail for a fee.
Until a few weeks ago, Bankman-Fried was still dealing with completely different sums. He was considered as good guy the crypto scene, cultivated the image of the billionaire who primarily wants to donate his wealth, and lured hundreds of thousands into crypto values with his trading platform FTX. Bankman-Fried denies being a scammer. Two of his closest confidants, on the other hand, confessed last.
