Palmer Luckey’s New Digital Banking Startup Erebor Eyes $2 Billion Valuation Amid Crypto Push
Palmer Luckey, the founder of defense technology firm Anduril and Oculus VR, is venturing into the digital banking space with a new startup, Erebor, which is expected to be valued at $2 billion, according to sources familiar with the matter, Business Insider reports.
Erebor is positioned as a digital bank focused on serving startups and cryptocurrency-related businesses. The company is reportedly raising at least $225 million in funding, with backing from prominent venture capital firms Founders Fund and 8VC. Both firms have longstanding ties to the tech and political worlds — Founders Fund is led by Palantir cofounder Peter Thiel, and 8VC by Joe Lonsdale, another Palantir cofounder.
The fundraising effort is still ongoing and subject to change, according to individuals familiar with the deal, who requested anonymity due to the private nature of the discussions.
Named after the treasure-laden mountain in J.R.R. Tolkien’s The Lord of the Rings, Erebor is the latest in a line of startups from Luckey with literary inspiration — a pattern shared by both Anduril and Palantir. The company recently applied for a US bank charter and aims to operate as a regulated financial institution offering services such as crypto-collateralized lending.
According to internal documents, Erebor’s executive team will include Jacob Hirshman, a former executive at stablecoin issuer Circle, and Owen Rapaport, cofounder of crypto compliance firm Aer Compliance, as co-CEOs. Mike Hagedorn, formerly a senior executive at Valley National Bank, is set to serve as president. Luckey will serve as the startup’s founder and strategic leader.
While Luckey, Hirshman, Rapaport, and the venture firms involved declined to comment, the timing of Erebor’s launch aligns with growing momentum for cryptocurrency in Washington. Since beginning his second term, President Donald Trump has moved to position the US as a supporter of digital assets, establishing a strategic bitcoin reserve and appointing investor David Sacks as the nation’s first “Crypto Czar.”
Investors have taken note. Circle, the US-based stablecoin company that recently went public, has seen its stock rise by over 113% since its June IPO, signaling renewed confidence in the crypto sector. Erebor appears set to tap into this resurgence, aiming to serve businesses navigating the intersection of finance and digital assets.
Luckey has maintained a high profile in both tech and politics. After selling Oculus to Facebook in 2014 for $2 billion, he later founded Anduril, which has become a major defense contractor. His political affiliations have also attracted attention. A supporter of President Trump, Luckey was dismissed from Facebook in 2016 after donating to a pro-Trump group — an exit both he and the company later said was unrelated to politics. Recently, Anduril and Meta Platforms announced a US military partnership.
