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Former FTX chief executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks from the Manhattan federal court after securing bail in New York City. Image Credit: REUTERS

California: 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.

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 per cent of the stated amount.

Such bonds also signal the seriousness of the crime being charged, and federal prosecutor Nicholas Roos made that point in court.

“Mr. Bankman-Fried perpetuated a fraud of epic proportions stealing billions for customers lenders and defrauding investors,” Roos said.

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 January 5, the judge said. It’s not clear if Bankman-Fried has yet secured the other signatories. A spokesman for Bankman-Fried didn’t immediately respond to a request for comment.

Failing to provide the signatories by the January deadline won’t necessarily result in jail time for the crypto founder, however.

US Magistrate Judge Gabriel Gorenstein, who approved Bankman-Fried’s bail on Thursday, previously dealt with another high-profile defendant who couldn’t find two people besides his wife and brother to sign a $10 million bond: Bernard Madoff.

In that case, Gorenstein modified the order to waive the requirement for the additional signatories. Madoff wound up pleading guilty to fraud charges roughly three months later.