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

When the Tidal Wave Hits

When I talked with Joe Bankman, the father of Sam Bankman-Fried, he described the moment his family’s nightmare began with an image I can’t shake. “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. “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?”

Before November 2022, Joe was living what most would call a successful life. He’s a tax law scholar at Stanford Law School, a clinical psychologist, and someone who thought he understood how the legal system worked. His son Sam had built FTX into a cryptocurrency empire and was listed as the 41st richest person on the Forbes billionaire list. Then everything collapsed.

The company filed for bankruptcy. Federal indictments followed. Sam was convicted and sentenced to 25 years in federal prison at age 33, ordered to forfeit 11 billion dollars. While the world watched this story unfold as a business scandal, the Bankman family was living through something entirely different.

The Lawyer Who Couldn’t Practice Law

You’d think having a legal background would help when your family faces federal charges. Joe discovered the opposite. “Nobody’s prepared for this kind of thing. I certainly wasn’t,” he said. “So, it’s a little bit like the tidal wave hits and the good news is maybe you were a lifeguard or something or a good swimmer. But it’s a tidal wave. You have no idea of what to do.”

Joe found himself in the strange position of becoming his son’s attorney out of financial necessity. “You end up being your own son’s attorney. We’re now our own son’s attorney, just your financial purposes,” he explained. “It’s incredibly expensive to hire attorneys. So no matter what you start what you’re pretty sure in the end to have nothing.”

The role came with an impossible emotional burden. “It’s a tough role to play and honestly, if you didn’t have to, I’d rather just be a dad. I’d rather not have to be the attorney as well. And you’re kind of driven into that.”

When Institutions Turn Against You

Before this experience, Joe believed in institutions. He spent his career working within them, trying to reform tax law, teaching at Stanford. The nightmare taught him about institutional power in ways he never expected.

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

The reach of that power extended everywhere. All their banks closed their accounts. Stanford initially wouldn’t let Joe teach. “Stanford didn’t want me teaching for a couple of years. That was very tough for Barbara and myself because teaching is what gives us meaning,” he told me.

Even basic services disappeared. “All of our banks debanked us. 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?”

The Month That Changed Everything

The trial lasted over a month. For Joe and his wife Barbara, it meant sitting in a courtroom every day while prosecutors said “the worst things on earth” about their son.

“Every sentence is actually the worst sentence that you’ve ever listened to, and they’re just starting,” Joe explained. “They’re going to go on for an hour and the next sentence is going to be just as bad.”

The family couldn’t even properly see Sam during this time. “He is delivered to the person at about five in the courtroom at about five AM and kept in a holding cell. He’s marched out in handcuffs right before the trial starts. So maybe you can catch your child’s eye. And that’s all.”

Sometimes a federal marshal would show unexpected kindness. “Sometimes one of the federal marshals will let you quote unquote get away with coming up to your son and saying, how are you doing? Or we love you. I’m not even sure that’s allowed, but sometimes that’s the length of humanity that as a parent, you’ll get.”

Living a New Life

After the 25-year sentence came down, Joe and Barbara had to accept that their old life was over. “Your life changes just completely. And we think of our old life that ended when that wave hit. And we look the same, except a little older, but we’re just different people,” Joe said.

Every day now revolves around their son’s incarceration. “Every day, it’s defined as figuring out the next time you can visit your son, making sure you’ve complied with all the visiting rules, making sure you budget it for it.”

The visiting process itself became another source of trauma. Families travel hundreds of miles only to be turned away for dress code violations or paperwork issues. “We’ve gotten to, you know, Los Angeles and which is 400 miles from where we are. And having been told, no, it’s not going to work today.”

When visits are denied, the person in prison doesn’t know what happened. “When we’re turned away, it’s not like Sam knows what’s happening. No, child, your parents just don’t come.”

People vs. Institutions

When I asked Joe about his biggest takeaway from this nightmare, his answer surprised me. Despite everything that happened, his faith in people has actually grown.

“I think 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,” he told me.

The distinction he draws is crucial. “I think institutions not so. And you won’t get your world vis-a-vis institutions is a much worse world. And that’s been sobering to me. So I regard people better an institution.”

Joe still teaches at Stanford. His students don’t see him as the guy from the news when he’s explaining tax law. “When I teach a class, if I’m explaining something, students really want to understand what I’m explaining. That’s why they came to law school. They’re not thinking of this guys in the news.”

The Bankman family’s story continues. There’s an appeal coming up in November. Joe spends his days working with lawyers, visiting his son when the prison system allows it, and trying to maintain some semblance of the meaningful work that defined his life before the tidal wave hit.

Their nightmare isn’t over. But Joe has learned something about survival that goes beyond legal strategy or institutional power. When everything falls apart, the people around you matter more than the systems that define your world. Sometimes that makes all the difference.