Palmer Luckey’s Erebor Hits $4.35 Billion Valuation After Landing FDIC Approval

TLDR

• Palmer Luckey’s Erebor banking startup closed a $350 million funding round at a $4.35 billion post-money valuation
• FDIC granted deposit insurance approval last week, advancing Erebor’s path to becoming a chartered national bank
• Lux Capital led the round with participation from Founders Fund, 8VC, and Haun Ventures
• Bank will target tech companies in crypto, artificial intelligence, defense, and manufacturing sectors
• Launch expected in 2026 following Silicon Valley Bank’s 2023 collapse that left sector without major banking partner

Erebor has closed a $350 million funding round at a $4.35 billion valuation following regulatory approval from federal banking authorities. Lux Capital led the investment round, with existing backers including Peter Thiel’s Founders Fund, 8VC, and Haun Ventures participating.

The Federal Deposit Insurance Corporation approved Erebor’s deposit insurance application last week. This regulatory milestone moves the banking startup closer to operating as a chartered national bank in the United States.

Palmer Luckey, who co-founded Erebor with Joe Lonsdale in 2025, also serves as CEO of defense technology company Anduril. Luckey previously founded Oculus VR before its acquisition by Facebook.

The startup emerged to address banking service gaps that developed after Silicon Valley Bank’s failure in March 2023. SVB had served as the primary financial institution for many venture-backed technology companies before collapsing.

Interest rate increases eroded the value of SVB’s securities portfolio, triggering a depositor run. The failure ranked among the largest bank collapses since the 2008 financial crisis.

Banking Services for Innovation Economy

Erebor plans to offer traditional banking services alongside crypto-related products. The company defined its customer base in regulatory filings submitted to banking authorities.

The bank will serve businesses in the United States innovation economy. Target customers include technology companies working in virtual currencies, artificial intelligence, defense, and manufacturing.

Payment service providers, investment funds, and trading firms also fall within Erebor’s intended market. The company received preliminary conditional approval from the Office of the Comptroller of the Currency earlier this year.

The FDIC deposit insurance approval remains valid for 12 months. Erebor must establish formal operations or receive an extension before the approval expires.

Timeline and Competitive Landscape

Erebor expects to launch operations in 2026 based on reports from industry sources. The Financial Times confirmed in October that Erebor’s application followed standard regulatory procedures.

The approval process did not involve special treatment despite connections between the Trump administration and Erebor’s founders. Luckey, Lonsdale, and Thiel maintain longstanding relationships with President Trump.

Other companies are pursuing similar digital asset banking strategies. Coinbase, Circle, and Ripple Labs have filed applications for national trust charters or comparable regulatory approvals with the OCC.

These applications aim to expand digital asset custody and settlement capabilities. The companies seek to operate under federal banking frameworks that bridge traditional finance with blockchain-based systems.

Regulatory Environment

The funding round occurs as regulatory clarity improves for digital assets in the United States. President Trump’s administration has signaled support for clearer crypto regulations.

David Sacks, serving as crypto and AI czar, stated Monday that the Securities and Exchange Commission and Commodity Futures Trading Commission will issue clear regulatory guidelines for cryptocurrencies. Leadership changes at the CFTC indicate movement toward defined regulatory frameworks.

Erebor’s name references a mountain from J.R.R. Tolkien’s “The Lord of the Rings” series. This naming convention aligns with other Thiel-associated projects that draw from Tolkien’s works.

The FDIC granted Erebor’s deposit insurance approval last week, marking the most recent regulatory advancement for the banking startup.

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