Billionaire Palmer Luckey is dipping his toe into the financial sector with a banking venture focused on helping tech entrepreneurs.
The company is known as Erebor, yet another entry in Luckey’s portfolio that follows the Thiel-world pattern of referencing lore from the tales of J.R.R. Tolkien. Just as Anduril is a reference to a character’s sword, and Palantir to a magical seeing stone, Erebor refers to the mountain in “The Hobbit” where the dragon Smaug hoards his gold away from would-be slayers and thieves.
While the moniker is not final, according to the New York Post, the venture is serious in its ability to reshape banking forever.
Deliberate federal interference in the nascent crypto banking market provoked the very crisis the feds purported to solve.
Luckey is partnering with Joe Lonsdale, a venture capitalist who co-founded Palantir Technologies and other software companies. Together, they will help tech startups build their businesses instead of maximizing returns like a traditional bank, insiders told the Post.
The key difference is that Erebor will work with stablecoins, a type of cryptocurrency tied to relatively stable assets like the U.S. dollar or gold. This is done to limit the volatility of a coin without sacrificing its benefits, creating investment opportunities far in excess of simply purchasing and holding, say, Bitcoin.
Even the president is working with stablecoins, particularly USD1, which is attached to the U.S. dollar.
The Post reported that Erebor was born out of the collapse of Silicon Valley Bank in 2023, caused by a slew of management errors, “investment missteps, market volatility, and regulatory changes,” according to Investopedia. The Biden administration ended up guaranteeing all deposits into SVB, despite the bank’s ruin.
But as Castle Island founding partner Nic Carter explained last year, deliberate federal interference in the nascent crypto banking market provoked the very crisis the feds purported to solve. “Biden bank regulators made it impossible for banks serving a particular legal industry to operate,” Carter wrote. “And in doing so, they actively caused the collapse of certain banks, namely Silvergate and Signature. These banks did not die by suicide but by murder. This remains a gigantic scandal, and no one has ever faced any responsibility for it.”
It is unknown who else is involved with the launch of Erebor; it is still in its early stages and has no public start date. Luckey’s representative did not immediately respond to Blaze News’ request for information regarding founders or key development points.
In that regard, Lonsdale’s venture firm 8VC has led a $225 million fundraising round, which will reportedly be used to meet federal regulatory requirements that are necessary for starting a bank, not for backing deposits.
Luckey is not expected to hold an executive role or be involved in day-to-day operations, but he would be adding “bank operator” to his laundry list of titles, which include defense contractor and handheld-gaming manufacturer.
The tech titan has increasingly been involved in larger-than-life projects, including advanced technologies for U.S. military equipment. His open-to-debate style has caused him to become a darling of the Silicon Valley class, and his prominent criticisms of Facebook/Meta (he has since buried the hatchet with Mark Zuckerberg) have helped his image as a palatable billionaire, a dynamic with echoes of Mr. Burns and his one-time rival Arthur Fortune.
“Cryptocurrency is so powerful and investable because it’s the most advanced tech ordinary Americans can use right now amongst themselves to create and grow wealth,” said James Poulos, Blaze Media’s editor at large.
“But it’s still not clear how exactly to transition the U.S. from a dollar backed by American global, economic, and military dominance to one backed by computational power,” he added. “While stablecoins weaken the ability of regular people to use Bitcoin free from government pressure and control, they strengthen the ability of Washington and Silicon Valley to transition the dollar stably away from the unsustainable ‘money printer’ model toward a dollar backed by energy itself, in the form of watts used to power compute. That’s why a bank like Erebor is basically inevitable.”
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