Silicon Valley Bank was closely tied to crypto firms and venture capital funds before its collapse.
After Silicon Valley Bank collapsed in March 2023, a group of billionaires, including Peter Thiel, planned to start a new financial services organization.
The Financial Times said that unidentified sources said the new bank, Erebor, will serve startups and bitcoin enterprises.
The project applied for a US bank charter to operate as a bank.
Thiel’s Founders Fund invested early in the bank. The group comprises Thiel, Palmer Luckey, co-founder of defense contractor Anduril, and 8VC founder Joe Lonsdale.
Thiel co-founded PayPal in the late 1990s and is a prominent Bitcoin and digital asset advocate.
Thiel supports crypto exchange Bullish, which filed for a US IPO, according to Cointelegraph.
Erebor wants to become a significant lender for early-stage startups and other “riskier” firms that may struggle to get money due to tightened banking restrictions.
The crypto business is still reeling after Silicon Valley Bank’s failure.
California’s financial authority shut down Silicon Valley Bank in March 2023 after rising interest rates destroyed the value of its long-term bond assets, causing a bank run and liquidity crisis when too many clients tried to withdraw funds.
Silicon Valley Bank was the first FDIC-insured bank to fail that year, Cointelegraph said.
Since the bank supported half of the US venture capital–backed tech and life sciences companies, its failure caused a huge market gap.
It caused a domino effect, bringing down Silvergate Bank, Signature Bank, and First Republic Bank.
One week of crypto investment funds losing 10% of their assets under management devastated the digital asset market.
Harvard Business Review reported that Silicon Valley Bank’s failure strained venture capital lending.
After its failure, First Citizens Bank bought Silicon Valley Bank in late March 2023. Private equity, technology, and life sciences remain its priorities.
