Unveiling Erebor: Peter Thiel's encryption bank, the conspiracy of Trump's financiers

Written by: Azuma (@azuma_eth)

On July 3rd, multiple mainstream financial media reported that several billionaires from the tech sector, including PayPal co-founder and Silicon Valley venture capital giant Peter Thiel, are joining forces to launch a new bank named Erebor, aimed at filling the gap in banking services for the cryptocurrency industry following the collapse of Silicon Valley Bank.

According to a report by the Financial Times, in addition to Peter Thiel, the billionaires behind Erebor also include Palmer Luckey, co-founder of defense technology company Anduril, and Joe Lonsdale, founder of big data analytics company Palantir (which Peter Thiel is also a co-founder of), while Peter Thiel's venture capital fund Founders Fund will also directly invest in Erebor.

If introducing Palmer Luckey and Joe Lonsdale might still leave many readers unfamiliar, let's put it another way: the two, along with Peter Thiel, are important financial backers of Trump in the 2024 U.S. presidential election.

It is worth mentioning that the name Erebor is derived from the fantasy epic "The Hobbit", where it is a "Lonely Mountain" occupied by the dragon Smaug, beneath which lies countless treasures of the Dwarves. In addition, the names Anduril and Palantir are also taken from this series of works, with the former meaning the famous sword "Flame of the West", and the latter meaning a "crystal ball" that can traverse time and space and perceive everything in the world.

Erebor has applied for a national bank charter with the Office of the Comptroller of the Currency, a U.S. federal banking regulator, which will allow Erebor to conduct banking operations. According to the application documents made public this week, Erebor will "operate as a national bank... providing traditional banking products and services related to virtual currencies" targeting clients in the innovative economy sector in the U.S., particularly tech companies focusing on cryptocurrency, artificial intelligence, defense, and manufacturing, while also serving the employees and investors of these companies, and plans to offer services to foreign enterprises seeking access to the U.S. banking system.

The Financial Times specifically emphasizes that Erebor hopes to take over the market positioning originally held by Silicon Valley Bank, providing banking services to high-risk enterprises and cryptocurrency practitioners who may be rejected by traditional banks.

In 2023, Silicon Valley Bank, which has a glorious history of 40 years and had won the Forbes "Best Bank in America" award for five consecutive years, declared bankruptcy due to a liquidity crisis. Many cryptocurrency-related projects/institutions, including BlockFi, Circle, and Avalanche, were clients of Silicon Valley Bank at that time, resulting in a severe blow to the cryptocurrency industry. In the panic, BTC once fell below $20,000.

Sources reveal that the co-founders of Erebor began discussions to establish the bank after the collapse of Silicon Valley Bank in 2023. Although Silicon Valley's assets were acquired and restarted by First Citizens BancShares, and some professionals from the bank have moved to HSBC USA, investors and executives in startup tech companies continue to complain about barriers to accessing banking services — many businesses find it difficult to obtain financing support at previous levels.

Erebor stated in the application documents that stablecoin-related business will also be a top priority for the bank - stablecoins pegged to real assets such as the US dollar are expected to become a key focus of the business, with the document emphasizing its goal to become "the institution with the most comprehensive regulation of stablecoin trading."

Odaily Note: Banking services surrounding stablecoins and cryptocurrencies have become the new competitive focus, and Circle recently submitted a bank license application. For more details, see "$60 billion in assets self-custody, 'stablecoin's first stock' Circle applies for federal trust bank license."

According to informed sources, Palmer Luckey and Joe Lonsdale will not participate in the daily management of Erebor. The bank's co-CEOs will be Jacob Hirshman, who previously served as an advisor to Circle, and Owen Rapaport, co-founder and CEO of the digital asset software company Aer Compliance. The former senior executive vice president of Valley National Bank will serve as president.

The headquarters of Erebor Bank will be located in Columbus, Ohio, and an office will be established in New York, but it will only provide digital services, with all products marketed through a smartphone app and website. The parts of the application documents concerning details such as shareholder composition, equity structure, and business plans remain confidential.

With the smooth passage of the GENIUS Act through the Senate, the new SEC chairman has pledged to establish a reasonable regulatory framework for the cryptocurrency market. Investment and business activities related to cryptocurrencies are bound to continue to grow, while there is still a certain gap in related banking services. Several players, including Erebor, have already noticed this piece of cake.

In the foreseeable future, more intense competition is expected to emerge around this service, but for the cryptocurrency industry itself, which is plagued by conservative banking services, this competition may be better the more intense it is.