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Palmer Luckey, Backed by Palantir’s Joe Lonsdale, Launching Crypto-Focused Bank Erebor

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Tech billionaire Joe Lonsdale, co-founder of Palantir, announced his investment in Erebor, a new U.S. digital-only bank founded by Palmer Luckey, co-founder of defense tech company Anduril. Erebor aims to fill the gap left by Silicon Valley Bank’s collapse in March 2023, which severely impacted startups and venture capital firms dependent on SVB’s services.

Erebor has applied for a national bank charter and plans to serve tech companies across sectors like artificial intelligence, cryptocurrency, defense, and manufacturing, as well as individuals connected to these industries. The bank’s name, drawn from Tolkien’s The Lord of the Rings, references the Lonely Mountain fortress known for reclaiming treasure.

Headquartered in Columbus, Ohio, with a secondary office in New York, Erebor intends to operate with a digital-first approach. Leadership includes Owen Rapaport and Jacob Hirshman, a former advisor to stablecoin company Circle.

The bank plans to hold stablecoins—a crypto asset class pegged to fiat currencies—to facilitate faster cross-border payments and digital financial services. Erebor aims to become “the most regulated entity conducting and facilitating stablecoin transactions,” signaling its focus on compliance in the evolving crypto banking space.

Besides Lonsdale, Erebor’s backers reportedly include Peter Thiel’s Founders Fund. Neither Luckey nor Lonsdale are expected to be involved in daily operations.

Silicon Valley Bank’s Former Owner Gains Approval to End Bankruptcy

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SVB Financial Group, the former owner of failed Silicon Valley Bank, received a U.S. judge’s permission on Friday to turn over its assets to creditors and end its bankruptcy. Its bankruptcy restructuring has made provision for the creation of a trust to pursue litigation against the U.S. Federal Deposit Insurance Corporation, which seized $1.9 billion from SVB Financial’s bank accounts during Silicon Valley Bank’s 2023 collapse – one of the largest in U.S. banking history.

The battle over the seized funds will play out in a California federal court. SVB Financial has argued the cash should be returned because the FDIC had invoked a “systemic risk” exemption to protect all deposits at Silicon Valley Bank, including accounts with more than the $250,000 that the FDIC typically protects. The FDIC has countered that it did not intend to protect the bank accounts of the parent company, saying the money was legally seized to offset its costs in rescuing the bank.

Depending on the outcome of the litigation, SVB Financial’s senior bondholders who are owed $3.3 billion will be paid between 41% and 96% of what they are owed. The bondholders include MFN Partners, Pacific Investment Management Company, Bank of America Securities, JP Morgan Securities, and King Street Capital, according to court documents. As part of its bankruptcy restructuring, SVB Financial has also sold assets, spinning off its venture capital business and investment banking unit.