Tech billionaires including Palmer Luckey set up dumb new bank for those who didn’t get burned enough in the 2022 crypto crash
Palmer Luckey, the founder of Oculus and occasional Bond villain, has taken a break from getting trapped in his own car elevators to lead a collective of tech billionaires in founding a new crypto bank called Erebor.
First thing’s first: this is not a bank for the likes of you and I. Erebor is all about investing in start-ups in the field of tech, AI, defence and of course crypto. Defence you say? Why yes, because Palmer is being joined in this venture by fellow Bond villain Peter Thiel’s Founders Fund, as well as Joe Lonsdale, who co-founded the military/surveillance software company Palantir.
Erebor will be based in Columbus, Ohio, with a secondary office in New York, and is digital-only. The co-CEOs will be Owen Rapaport and Jacob Hirshman (thanks, Reuters). The funny part is that it’s being set up to replace Silicon Valley Bank (SVB), which became the third-largest bank failure in US history in March 2023 following the late 2022 crypto crash. But this time it will be different!
Why? Stablecoins bro. Per its bank charter application, Erebor wants to be “the most regulated entity conducting and facilitating stablecoin transactions.” Hirshman is a former adviser to stablecoin company Circle, and Erebor plans to hold a lot of stablecoins on its balance sheet. Of all the crypto fakery I think stablecoins are among the most nefarious, because they make the impossible-to-keep promise that their value will stay pegged to currencies such as the US dollar thanks to being backed by reserves of said currency.
Except… well, remember the crypto crash we just mentioned? The one that took down SVB? Yeah that was sparked by the collapse of TerraUSD, a stablecoin that turned out to be anything but, and whose founder Do Kwon was finally extradited to the US to face charges this year.
The crypto-boosters will point out that TerraUSD was an algorithmic stablecoin, meaning it was not backed by real reserves, but I’m not sure many of the others are either. I mean, look, I’ve got two billion dollars in my closet to back the brand-new RichStantonCoinTM, and will happily sell you a million dollars’ worth: I just can’t show you the real dollars, mkay?
The point of SVB and thus Erebor is risky bets on fledgling startups that are unlikely to be backed by traditional finance, which has all these pesky rules and regulations. Erebor will especially look to serve such entities with “insufficient access to credit,” so who knows, but I might end up giving RichStantonCoinTM a go.
2022/3 was a hell of a time for crypto, and it felt like the wheels were coming off: not before time, some would say. It’s me by the way, I am some. But those who do not learn from the past are condemned to repeat it, and from here Erebor just looks like a big juicy domino in a field full of them.