“Behind the FTX Collapse: A Father’s Story of Survival”: Joe Bankman

When the Tidal Wave Hits

Joe Bankman was living his life as a Stanford law professor, teaching tax law and seeing psychology patients, when everything changed in November 2022. His son Sam Bankman-Fried, founder of FTX and once the 41st richest person on Forbes’ list, saw his cryptocurrency empire collapse into bankruptcy and federal indictment. What followed was a 25-year prison sentence and an $11 billion forfeiture order.

“It’s like you’re walking along the beach and a tidal wave hits you and you look out and one of your family members is swept to sea and everybody, your house is ruined,” Joe told me when I talked with him about surviving this nightmare as a family member. “All your possessions are gone and you’re looking for your other family members and thinking, how can I get a boat? What do I do now?”

As Sam’s father, Joe found himself thrust into a world he never expected to navigate. Despite his legal background, he discovered that being a law professor doesn’t prepare you for the reality of federal criminal defense.

The Protective Bubble

One of the first decisions the Bankman family made was to stop reading the news coverage. With hundreds of stories being written about the case, Joe and his partner Barbara Fried realized they had to ask themselves a crucial question: what’s going to help me survive till the next day?

“Is reading this account by reporter who’s just reporting and doesn’t really know the facts going to be helpful to me?” Joe explained. “And often the answer is no. That’s no matter what they’re going to say. So, one protective thing is we quit reading the news.”

This decision had an unexpected benefit. Joe found that when he stopped following news about his family’s crisis, he also stopped obsessing over national news in general. The strategy of creating a protective bubble around the family unit became essential for their survival.

The face-to-face interactions told a different story than the media narrative. Joe discovered that when he was teaching his Stanford classes, students weren’t thinking about the headlines. They were focused on understanding tax law, on how the material would affect them as future lawyers and citizens. The personal connections remained strong even when institutions wavered.

Institutions vs. People

Joe’s experience revealed a stark contrast between how individuals and institutions responded to his family’s crisis. While Stanford initially didn’t want him teaching for a couple of years, his students and colleagues remained supportive. The university’s institutional fear conflicted with the genuine relationships he had built.

But the institutional challenges went beyond his workplace. Banks began “debanking” the family, closing their accounts without explanation. “All of our banks debanked us,” Joe said. “And that’s a small thing. But you actually need a bank because you’ve got credit cards and you don’t have that much money anymore. And what are you going to do without a bank?”

This debanking happened repeatedly. When Joe tried to open individual accounts, thinking the Bankman-Fried name might be the issue, he was rejected again. It’s a reality that many families facing federal cases discover, but one that comes as a shock when you’re trying to manage basic necessities like electricity bills.

The Courtroom Reality

The trial lasted over a month, and for Joe and Barbara, it meant sitting through daily testimony where, as Joe put it, the government would say “the worst things on earth about your child.” The power imbalance became starkly apparent.

“Until you see the power of our government working against you, you have no idea how powerful it is,” Joe observed. “It’s like, however powerful you might think you are, you are nothing compared to that and just have no power.”

The family’s interaction with Sam during the trial was severely limited. He would be delivered to the courtroom around 5 AM, kept in a holding cell, then marched out in handcuffs just before proceedings began. Sometimes Joe and Barbara could catch their son’s eye. Sometimes a federal marshal would show humanity and allow them to briefly ask how he was doing and tell him they loved him.

Surrounded by reporters every day as they entered and left the courthouse, Joe eventually developed a strategy of simply posing for pictures to speed up their exit. “I know you need a picture. How about we just pose for your pictures and then you let us leave,” he would tell them. The high point of each day became getting on the subway car where they could blend in as just regular people.

Living the New Reality

When I asked Joe about their life now, he was clear that their old life ended when the wave hit. Every day is now defined by prison visits, legal appeals, and compliance with visiting rules. Budget considerations for travel. Saving dates for court appearances. Constant communication with lawyers.

“Everything you can imagine a loving parent would do, you’re doing,” he explained. “So there’s no day that is like your old life, that is gone.”

The prison visiting process itself became another source of trauma. Visits are limited to half a day per week, on prescribed times, with strict dress codes that aren’t always clear. Joe and Barbara have traveled 400 miles to Los Angeles only to be turned away for paperwork issues or clothing violations. When they’re rejected, Sam doesn’t know why his parents didn’t show up.

“When we’re turned away, it’s not like Sam knows what’s happening,” Joe said. “Your child, your parents just don’t come.” The uncertainty can last days before communication gets through about what happened.

The Biggest Takeaway

After living through this nightmare for nearly two years, Joe’s perspective has shifted in a specific direction. When I asked him about his biggest takeaway, he looked up at the ceiling for a moment before answering.

“I think it’s people versus institutions,” he said. “This hasn’t at all hurt my faith in people. In fact, I’m more pro people than ever before. A lot of people under terrible circumstances have time to be kind from guards to other inmates to a lot of people you don’t know. I think institutions not so.”

He’s seen extraordinary kindness from unexpected places. Prison guards who didn’t have to show compassion but were moved by a parent’s grief. Students and colleagues who remained supportive. Strangers who offered help when they didn’t have to.

But institutions, he discovered, operate differently. They’re driven by fear, liability, and self-preservation in ways that individual humans often aren’t. The contrast has been sobering and has fundamentally changed how he views the world.

Joe and Barbara continue to fight through appeals while building a new life defined by supporting their son. They’ve learned to adapt to circumstances they never imagined facing, discovering reserves of resilience they didn’t know they possessed. The tidal wave changed everything, but it didn’t wash away their determination to show up for family when it matters most.