Palmer Luckey, cofounder of the weapons manufacturer Anduril, along with firms connected to Palantir cofounders Joe Lonsdale and Peter Thiel, are investing in a new bank that is aiming to fill a gap left by Silicon Valley Bank’s collapse two years ago. The venture is expected to be backed by upwards of $250 million in funding from Luckey, Lonsdale’s venture firm 8VC, Thiel’s Founders Fund, crypto-focused VC Haun Ventures, and several angel investors whose identities are not yet publicly known.
Like Anduril and Palantir, Erebor Bank is named after a term coined by J.R.R. Tolkien. (Introduced in The Hobbit, it’s the name of a mountain where the murderous dragon Smaug hoards gold and jewels.) The bank’s organizers and backers have remained tight-lipped about their vision. But their national bank charter application filed in June with the US Office of the Comptroller of the Currency (OCC), as well as interviews with more than a dozen industry sources, suggest the organizers are leveraging current regulatory openness in banking, as well as their political power, to build a crypto-focused Silicon Valley Bank successor made in their image.
The leadership team named in Erebor’s application includes Michael Hagedorn, an experienced bank executive who will serve as Erebor’s president; Trevor Capozza, head of operations at Palmer Luckey’s family office; and co-CEOs Owen Rapaport, cofounder of crypto compliance platform Aer Compliance, and Jacob Hirshman, who has served in regulatory and advisory roles at the stablecoin provider Circle. Erin Gleason, chief communications officer of Founders Fund, told WIRED that Thiel was “not involved” in the deal and that Founders Fund invested $1 million into Erebor. Luckey and Lonsdale are not named in the nonconfidential sections of Erebor’s filings; the application notes that major shareholders will not be involved in day-to-day operations.
Luckey, 8VC, Erebor’s organizers, and their attorney, Adam Cohen, did not respond to requests for comment.
Erebor’s intended client base is similar to that of Silicon Valley Bank, which served as the go-to business-banking partner for the San Francisco Bay Area tech industry and its affiliates. (SVB famously collapsed in March 2023 after economic volatility and risky liquidity practices led to a run on the bank. First Citizens Bank purchased SVB after the collapse; it now operates as a subsidiary.) The proposed bank states in its OCC filing that its customers would include startups in industries like crypto, AI, and defense, as well as wealthy and ultrawealthy consumers working in these fields. It also plans to assist foreign banks with some dollar-based activities. Erebor claims its target business clients are currently “not well served by either traditional or disruptive financial institutions, in particular with respect to insufficient access to credit” and says it will maintain a conservative balance sheet to account for the risks of “having a loan portfolio focused on frontier industries.”
Erebor also has crypto aspirations, including becoming “the most regulated entity conducting and facilitating stablecoin transactions” and facilitating “broader acceptance of stablecoins.” Stablecoins are cryptocurrencies whose value is tied to a currency or traditionally less-volatile commodity; they are often backed by cash or instruments like treasury bills with the aim of maintaining a consistent value. The bank additionally says it would accept cryptocurrencies as collateral for some loans.