The agreement was reached on Monday, avoiding a lengthy court hearing that was set to include witness testimony.

Under the terms of the settlement, Trump's lawyers and Knight Specialty Insurance Company, the insurer involved in the bond, have agreed to keep the $175 million in a cash account. While the account will accrue interest, it will also be free from any potential financial risks. Notably, the account has already grown by more than $700,000.

The bond serves as a safeguard against the state potentially seizing Trump's assets to satisfy the $454 million he owes after losing a court case initiated by the Democratic attorney general. The lawsuit alleged that Trump, his company, and key executives had committed fraud by misrepresenting his wealth to banks and insurers. Trump vehemently denies these allegations and is currently appealing the judgment.

The settlement was reached in front of Judge Arthur Engoron, who had previously issued the substantial judgment in February. Engoron had engaged in tense exchanges with Trump's attorney, Christopher Kise, highlighting potential challenges in collecting the posted funds if the judgment were to be upheld. Kise described some of the judge's arguments as "wildly speculative."

Kise also expressed frustration with the office of New York Attorney General Letitia James, suggesting that their objections seemed inevitable regardless of the proposed solutions. However, soon after Kise spoke, Andrew Amer, an attorney representing New York state, proposed settlement terms that addressed the state's concerns regarding the out-of-state insurance company involved in raising the bond.

As part of the settlement, Knight Specialty Insurance, a subsidiary of the Knight Insurance Group based in Los Angeles, will retain exclusive control over the $175 million. The company has agreed to submit to the jurisdiction of the New York state court and refrain from moving the funds into mutual funds or other financial instruments.

Trump's attorney, Alina Habba, commented on the settlement outside Trump's unrelated criminal trial on hush money charges, accusing Judge Engoron of lacking understanding of basic financial principles. Habba stated that the agreement ensured that everything would remain the same, with modified terms.

Trump himself criticized Engoron, claiming that the judge had questioned the integrity of the bonding company. Emphasizing the reliability of Knight Specialty Insurance, Trump asserted that the company held $175 million of his collateral.

With the settlement reached, the focus now shifts to Trump's ongoing appeals process, as he continues to contest the civil fraud judgment against him. The resolution of the bond dispute provides a temporary reprieve for Trump, protecting his assets until a final decision is rendered.