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A group of tech billionaires led by Palmer Luckey, co-founder of military contractor Anduril, is preparing to launch a US bank intended to fill the gap left by Silicon Valley Bank serving start-ups, including cryptocurrency businesses.
To be named Erebor, the bank would be backed by high-profile tech investors including Joe Lonsdale, the founder of venture capital firm 8VC and a co-founder of Peter Thiel’s defence group Palantir, according to people familiar with the matter.
Thiel’s venture capital fund, Founders Fund, would also be among the investors, according to two people close to the matter.
Like Anduril and Palantir, Erebor’s name is a reference to JRR Tolkien’s The Lord of the Rings. Erebor is the “lonely mountain” whose treasures are reclaimed from the dragon Smaug.
Luckey and Lonsdale — who were big donors to Donald Trump in the 2024 US presidential election — want the bank to take over the niche once occupied by SVB as the go-to lender for riskier companies and cryptocurrency players that traditional banks might reject.
Erebor has applied for a national bank charter in the US, a licence that allows a financial institution to operate as a bank.
“The bank will be a national bank . . . providing traditional banking products, as well as virtual currency-related products and services, for businesses and individuals,” according to the application, made public this week.
Its target market would be businesses that were part of the US “innovation economy”, in particular tech companies focused on virtual currencies, artificial intelligence, defence and manufacturing, the filing said. It would also serve individuals who work for or invest in these companies.
It also planned to work with non-US companies “seeking access to the US banking system”.
Erebor’s co-founders first discussed launching a bank after the collapse of SVB in 2023, according to a person close to the matter. SVB had been the main bank for US start-ups and their venture capital backers.
Its assets were sold to First Citizens, which has since relaunched SVB, and a number of its bankers moved to HSBC in the US. But investors and executives complain about a gap in banking services for fledgling tech companies since SVB’s demise — with some start-ups struggling to get the same access to capital.
Erebor said in the filing it would “differentiate itself” by working with customers that “are not well served by traditional or disruptive financial institutions, in particular with respect to insufficient access to credit”.
Cryptocurrencies known as “stablecoins”, which are pegged to real-life assets such as the dollar, are expected to be a significant part of the bank’s operations. The application states Erebor aims to be “the most regulated entity conducting and facilitating stablecoin transactions”.
Luckey and Lonsdale were not expected to be involved in the day-to-day management of the bank, according to people familiar with their plans. It will be run by co-CEOs Jacob Hirshman, who previously worked as an adviser at crypto group Circle, and Owen Rapaport, co-founder and CEO of digital assets software company Aer Compliance. Mike Hagedorn, former senior executive vice-president at New Jersey-based Valley National Bank, will be the bank’s president.
Its head office will be in Columbus, Ohio, with an additional office in New York, but it will offer digital-only customer service, marketing all of its products and services via a smartphone app and website.
Part of the application was submitted confidentially and has not been made public, such as details relating to its shareholders, equity structure and business plan.
Luckey did not respond to a request for comment. Lonsdale confirmed he was a financial backer to the project but declined to comment further. Rapaport and a spokesperson for Thiel declined to comment. Hirshman and Hagedorn did not reply.
