# Erebor > **Tier 1 super-watch** (since 2026-10-07). Full dossier: [[Erebor Dossier]] · running feed: [[Erebor Watch Log]] · balance sheet: [[Erebor Call Reports]] · lending: [[Erebor Loan Book]]. A digital-first national bank founded by [[Palmer Luckey]] and [[Joe Lonsdale]] to serve the U.S. "innovation economy" — startups, defense contractors, crypto companies, AI firms, and advanced manufacturers. Headquartered in Columbus, Ohio with a satellite office in New York. Named after the Lonely Mountain from Tolkien's *The Hobbit*, where the dwarf kingdom hoards its gold — continuing [[the Thiel network]]'s Middle-earth naming tradition (see: [[Palantir]], [[Anduril]]). ## Overview - **Founded:** 2025 - **Headquarters:** 500 Neil Ave, Columbus, Ohio (+ New York satellite) - **Valuation:** $4.35 billion (December 2025, post-money). Since August 2026 it has been in advanced talks to raise ~$1.5B at $8B pre-money (~$9.5B post-money). **As of October 7, 2026, no report confirms the round closed.** - **Capital raised:** ~$635 million in opening capital (including the $350M December 2025 round) - **Deposits:** More than $7B (FT, reported October 6, 2026), up from $1.1B at the end of March 2026 - **Loans:** $77.8M on the June 30, 2026 call report (see the 2026 balance-sheet section below) - **Charter:** National bank charter from the [[OCC]] (February 2026), FDIC-insured deposits (FDIC cert. 59378). Reported as the first national bank charter issued under the current administration - **CEO:** [[Owen Rapaport]] (ex-Aer Compliance). Described as co-CEO with [[Jacob Hirshman]] (ex-[[Circle]]) at launch; an August 2026 profile lists Hirshman as chief strategy officer. See [[Erebor Leadership]] - **President:** [[Mike Hagedorn]] (ex-Valley National Bancorp CFO; earlier UMB Financial and Wells Fargo) - **CTO:** Aaron Pelz (ex-Pinwheel) - **Board:** [[Palmer Luckey]] (principal shareholder, board member — not in operations) ## What It Does Erebor is positioning itself as the SVB replacement — the primary bank for the post-2023 tech and defense ecosystem. Its product suite includes: - **Traditional banking:** Deposits (FDIC-insured), lending, treasury management via API-first infrastructure - **Crypto services:** Stablecoin integration, stablecoin holdings, crypto-collateralized loans - **Startup lending:** Loans backed by private securities or cryptocurrency holdings - **AI chip financing:** Credit facilities for purchasing high-performance AI chips (GPUs) - **Defense contractor banking:** Financial services for defense tech companies, their employees, and investors The target customer base: technology companies in virtual currencies, AI, defense, and manufacturing; payment service providers; investment funds; and trading firms. ## The SVB Thesis Silicon Valley Bank's collapse in March 2023 left a vacuum — no major bank was purpose-built to serve tech startups, handle crypto assets, or bank defense contractors without legacy compliance friction. Erebor's pitch is filling that gap with a digital-only, API-first bank designed from scratch for the "innovation economy." The timing is strategic: traditional banks have been de-risking from crypto and tech since 2023, creating an opening. ## 2026: A Deposit Vault, Not Yet a Lender Erebor's first eight months show deposits growing extremely fast while lending barely started: | Date | Deposits | Other figures | Source | |------|----------|---------------|--------| | End of March 2026 | $1.1B | Bank opened in February | Bloomberg, FT | | June 30, 2026 | $4.06B | Total assets $4.66B; loans $77.8M; cash and balances at other banks $4.17B; equity $597.4M; Tier 1 leverage ratio 38.81%; net loss $10.3M | Call report (FFIEC data via BankRegReports) | | End of July 2026 | $4.6B | — | FT via CoinDesk | | Early October 2026 | More than $7B | 500+ customers and $3B+ in deposits added over the prior quarter | FT, relayed by Crowdfund Insider and TBPN (Oct 6) | **What the June 30 numbers show:** loans were under 2% of deposits, and roughly 90% of the bank's assets were cash parked at other banks. That makes Erebor a deposit vault for the network rather than a credit provider to it, so far. Its first large disclosed loan (Valar Atomics, below) came in August, after that reporting date. The September 30 call report will be the first to show whether lending has begun at scale. **How this changes the SVB comparison:** [[Silicon Valley Bank]] failed when its uninsured, sector-concentrated depositors ran at the same moment that long-duration bond losses ate its capital. Erebor holds mostly cash, so the bond-loss channel is mostly absent for now. The deposit-concentration channel is not: a deposit base drawn from one interconnected ecosystem of crypto, AI and defense firms backed by the same investors could still leave all at once. ## First Major Loan: Valar Atomics (August 2026) On August 4, 2026, [[Valar Atomics]], a nuclear startup building reactors for heavy industrial power and fuel production, announced a $200M credit facility. **Erebor led it as administrative agent**, alongside J.P. Morgan, Crescent Cove and Hercules Capital. Valar announced a $1B Series B led by [[Sequoia Capital]] at the same time. [[Valor Equity Partners]] invested in that Series B and is also among the expected investors in Erebor's 2026 round, which adds one more overlap between the bank's investors and its borrowers. This is the first public sign of Erebor moving from holding startup deposits to financing the physical-infrastructure layer of the AI buildout. It is also another Tolkien-named company in the same network. ## Founders & Leadership Five co-founders plus Luckey and Lonsdale as founding backers: - **[[Palmer Luckey]]** — Principal shareholder and board member. Founder of Oculus VR and CEO of [[Anduril]]. Not involved in day-to-day operations. - **[[Joe Lonsdale]]** — Co-founder. Co-founder of [[Palantir]], founder of 8VC. Not involved in day-to-day operations. 8VC invested $250M+. - **Trevor Capozza** — Co-founder. - **[[Owen Rapaport]]** — Co-founder and CEO (co-CEO at launch). Previously co-founded Aer Compliance (digital assets compliance software). - **[[Jacob Hirshman]]** — Co-founder; co-CEO at launch, later listed as chief strategy officer. Former counsel to Circle (stablecoin company). - **Aaron Pelz** — Co-founder and CTO. Previously led engineering at Pinwheel (fintech). ## Funding | Round | Amount | Valuation | Lead | Other Investors | |-------|--------|-----------|------|-----------------| | Opening capital (total) | ~$635M | — | — | — | | Earlier rounds | ~$285M | — | 8VC (~$250M) | Founders Fund, Haun Ventures | | Dec 2025 | $350M | $4.35B post-money | [[Lux Capital]] | Founders Fund, 8VC, Haun Ventures, Fundrise VCX | | 2026 round (advanced talks since Aug 2026; not confirmed closed) | ~$1.5B | $8B pre-money / ~$9.5B post-money | Not reported | Expected: [[Lux Capital]], Human Capital, [[Valor Equity Partners]], [[Andreessen Horowitz]], SV Angel; existing backers [[8VC]] and Haun Ventures | **Reading the 2026 numbers:** Bloomberg (July 2) and Axios (August 10) reported a valuation of "at least $8B." The FT (August 11) reported $9.5B. These describe the same deal ($8B before the new money, about $9.5B after it), not an upward revision. The FT also reported a regulatory condition behind the raise: Erebor must keep a leverage ratio of at least 12% for its first three years, so equity has to grow as the balance sheet grows. **Correction (2026-10-07):** an earlier version of this page said the bank was "well above" the floor at 38.81%. That figure is the regulatory leverage ratio, which divides capital by *average* assets over the quarter, and it was inflated by deposits arriving mid-quarter. Against quarter-end assets, equity was **12.8%** ($597.4M of $4.66B), barely above the floor. With deposits now above $7B, the raise is what keeps the bank above its charter condition. The full arithmetic is on [[Erebor Call Reports]]. Key investor connections: - **[[Founders Fund]]** — [[Peter Thiel]]'s VC firm, also the primary funder of [[Anduril]] and [[Palantir]] - **8VC** — [[Joe Lonsdale]]'s firm, major [[Anduril]], [[Epirus]], and Saronic investor - **Haun Ventures** — Katie Haun's crypto-focused fund (Haun is former a16z crypto GP) - **Lux Capital** — Led the $350M round; defense-adjacent VC - **Fundrise VCX** — Public retail fund that also holds [[SpaceX]], [[OpenAI]], and [[Anthropic]] ## Regulatory Timeline - **June 11, 2025** — OCC charter application filed - **August 2025** — Adam Cohen, the [[Skadden]] lawyer who worked on Erebor's OCC application, joins OCC as Senior Deputy Comptroller and Chief Counsel - **October 15, 2025** — OCC grants preliminary conditional approval (~4 months, dramatically fast) - **December 2025** — FDIC approves deposit insurance - **February 2026** — National bank charter formally granted; bank opens. Condition: a leverage ratio of at least 12% for three years (FT) - **End of March 2026** — $1.1B in deposits - **May 2026** — Venezuela pitch (see below) - **June 30, 2026** — First full-quarter call report: $4.06B in deposits, $77.8M in loans - **August 2026** — Leads the $200M [[Valar Atomics]] credit facility; advanced talks on a ~$1.5B raise - **October 2026** — Deposits reported above $7B ## The Tolkien Name Erebor is the Lonely Mountain in Tolkien's *The Hobbit* — the ancient dwarf kingdom where Smaug the dragon hoards a vast treasure. The name fits the Thiel network's Middle-earth naming pattern: - **[[Palantir]]** — the "seeing stones" used for surveillance (apt for a data analytics company) - **[[Anduril]]** — "Flame of [[the West]]," Aragorn's reforged sword (apt for a weapons company) - **Erebor** — the mountain treasury (apt for a bank) Fortune noted the name has a "dark history" — Erebor was conquered by a dragon, its wealth became a source of conflict (the "Battle of Five Armies"), and the dwarves' obsession with gold is a recurring Tolkien theme about the corruption of wealth. Whether the founders intended the irony is unclear, but the pattern of naming companies after powerful Tolkien artifacts that are also sources of danger and temptation is... consistent. ## Defense & Government Connections Erebor is not a defense company, but it sits squarely inside the defense tech financial ecosystem: 1. **Founder overlap:** [[Palmer Luckey]] is CEO of [[Anduril]] ($60B valuation, $20B Army contract). [[Joe Lonsdale]] co-founded [[Palantir]] and funds [[Anduril]], [[Epirus]], and Saronic through 8VC. 2. **Investor overlap:** [[Founders Fund]], 8VC, and Lux Capital are the same firms funding defense tech companies. 3. **Target customers:** Erebor explicitly lists "defense" and "manufacturing" companies as target clients, alongside crypto and AI firms. 4. **Geographic co-location:** Erebor's Columbus, Ohio HQ is miles from [[Anduril]]'s $1B [[Arsenal-1]] mega-factory — the same city, creating a potential vertically integrated defense-finance hub. 5. **Financial infrastructure thesis:** If defense tech companies need banking services tailored to government contracting, classified operations, and large hardware procurement, Erebor could become the financial backbone of the defense tech stack. This is the logical extension of the Thiel network's strategy: [[Palantir]] provides the data layer, [[Anduril]] provides the weapons layer, and Erebor provides the financial layer. See: [[Founding and Funding Map]] ## Venezuela Pitch (May 2026) On May 15, 2026, Bloomberg reported that Erebor had approached senior officials in [[Venezuela]] about restoring the country's access to the US financial system. The pitch came after the US eased sanctions on Venezuela's central bank in mid-April. Per Bloomberg Línea's version of the story: - **Who:** Co-founder Jacob Hirshman pitched Luis Pérez, interim president of Venezuela's central bank. Erebor also met with the private banks Banco Nacional de Crédito, Banco Mercantil and Bancamiga. - **What:** Correspondent banking lines for Venezuelan banks and subaccounts for their clients, which would let local companies open US accounts. - **Erebor's framing:** A spokesperson called them "preliminary discussions" and said the bank's role would be limited and carefully defined. - **Contested claim:** According to a person close to the talks, Hirshman told Venezuelan executives that the bank had US government backing. This was not confirmed. - **Status:** No agreement had been reported as of the original story. JPMorgan and Citi have stayed cautious about Venezuelan clients. The same founder base that builds weapons for the US government ([[Anduril]]) was offering to be Caracas's banking bridge back into the dollar system. That is the defense, finance and foreign-policy overlap this vault tracks. ## Controversies ### Fast-Tracked Charter (The Adam Cohen Problem) The most significant controversy: Erebor received OCC conditional approval in ~4 months, dramatically faster than the typical 12-18 month timeline for new bank charters. Critics point to Adam Cohen, the Skadden Arps partner who worked on Erebor's OCC application, who then joined the OCC as Chief Counsel in August 2025 — just two months before Erebor's approval. This revolving-door move raised serious conflict-of-interest concerns. See: [[Revolving Door]] ### Elizabeth Warren's "Crony Capitalism" Investigation Senator [[Elizabeth Warren]] publicly condemned the approval, citing Erebor's own fundraising documents which told prospective investors: **"Palmer's political network will get this done"** and touted a co-founder's **"unique connectivity to banking regulators,"** including Comptroller [[Jonathan Gould]]. Warren called it "crony capitalism" and warned of potential taxpayer-funded bailout risk. On **April 23, 2026** she widened the probe in letters to Gould and Luckey, quoting a fundraising memo Erebor had refused to provide. The memo promised a charter "in less than 6 months from submission" and described plans to lend against crypto, private securities and GPUs and, longer term, to **"deploy its own assets into DeFi"**, a plan Warren noted was absent from the public charter application. No public response has been found. See [[Erebor Watch Log]]. ### Concentration Risk (SVB 2.0?) *(See the 2026 balance-sheet section above for how this risk looks with real numbers.)* Financial experts have flagged that Erebor's sector concentration — crypto, AI, defense — mirrors the exact risk profile that destroyed SVB. A bank serving a single interconnected ecosystem of companies backed by the same investors creates correlated risk: if the defense tech or crypto market contracts, Erebor's loan book, deposit base, and customer base all deteriorate simultaneously. ### AML Concerns Anti-money laundering experts have raised concerns about a bank simultaneously serving crypto companies (high AML risk), defense contractors (ITAR/export control compliance), and offering stablecoin integration — a combination that creates significant compliance complexity. ## Connection to Anduril The Erebor-Anduril connection is not just personnel and investors — it's geographic and strategic: - **Same founder:** [[Palmer Luckey]] - **Same investor base:** [[Founders Fund]], 8VC, Lux Capital - **Same city:** Columbus, Ohio (Erebor HQ + [[Arsenal-1]]) - **Complementary function:** Anduril builds weapons; Erebor could bank the companies and people in the weapons supply chain - **Same network:** Both are Thiel-backed, Middle-earth-named companies in the defense tech ecosystem If Arsenal-1 becomes Anduril's flagship production site and Erebor captures the banking needs of the same ecosystem, Columbus becomes a vertically integrated hub for defense tech, AI, and financial infrastructure — all controlled by the same network of people and capital. ## See Also - [[Palmer Luckey]] - [[Joe Lonsdale]] - [[Peter Thiel]] - [[Founders Fund]] - [[Anduril]] - [[Arsenal-1]] - [[Founding and Funding Map]] - [[Revolving Door]] - [[Defense Tech Conflicts of Interest]] - [[Crypto-Political Machine]] - [[Erebor Dossier]] - [[OCC Charter Wave]] — Erebor against the rest of the OCC's charters - [[Valar Atomics]] - [[Valor Equity Partners]] - [[Haun Ventures]] - [[Fintech Sector]] - [[Silicon Valley Bank]] - [[Venezuela]] - [[OCC]] - [[Jonathan Gould]] - [[Palmer Luckey News Log]] - [[Joe Lonsdale News Log]]