Target valuation of $8 billion: why SBI and Robinhood (HOOD.US) are betting on Erebor

According to Woofun AI, Japanese financial giant SBI Holdings officially announced on November 3 that it will inject $100 million into the American digital bank Erebor Bank, headquartered in Columbus, Ohio, through its US subsidiary SBI Holdings USA.

The establishment of this strategic partnership marks a new stage in the acceptance of the crypto-native banking industry by traditional financial institutions, and SBI clearly stated that it will use this to explore opportunities for cooperation with Erebor in stablecoin access and deeper business.

The rise of Erebor Bank is inextricably linked to the deep technical background and complex political ties of its founding team. The bank was co-founded by Palmer Luckey, Owen Rappaport, Jacob Hirshman, Aaron Peltz, and Trevor Capoza in 2025, and its name is inspired by the Lonely Mountain in “The Hobbit.” Among them, Palmer Luckey is famous in the industry as the creator of the virtual reality helmet Oculus Rift, the original founder of Oculus VR, and the founder of defense technology company Andriel Industries, but he only works as a strategic advisor on the board of directors of Erebor Bank and is not involved in daily operations. The remaining co-founders each carried out their duties: Owen Rapaport was the founder and current CEO of Aer Compliance, a cryptocurrency compliance company; Jacob Hirschman was a Circle (CRCL.US) advisor and serves as Sullivan & Cromwell Law Firm and is currently the chairman of the board; Aaron Peltz is the chief technology officer; and Trevor Kapoza's specific responsibilities were not publicly disclosed, but he is also the co-founder.

Notably, Luckey has long been an important donor to the Republican Party and Donald Trump-related campaigns. Since 2017, he has donated a total of $5.9 million to Republican candidates and related groups, and has hosted numerous Trump-related fundraising events, including making huge direct donations to the “Trump 47 Committee.” Luckie's political commitment did not wane during the 2026 midterm elections. According to LAist and other media analysis, he donated more than 350,000 US dollars to more than 70 campaign projects during the election cycle. Almost all of the funds went to Republican-related groups, and the cumulative amount of donations to relevant Republican committees has exceeded 1 million US dollars. He also hosted the “Save the U.S. Senate” fundraiser in connection with the National Republican Senate Committee. In October 2026, Donald Trump publicly called Luckey “my friend” and “an amazing person” at an event held at the new Andriel, Maryland shipyard, further underscoring the close connection between the two.

In terms of business model, Erebor aims to serve America's “innovative economy” enterprises. The core customer groups cover defense, robotics, artificial intelligence, hard technology, energy, advanced manufacturing, and cryptocurrency industries. The bank provides services such as deposits, loans, payments and fund management, supports stablecoin deposit and withdrawal operations, and has a 24-hour blockchain settlement function. Unlike trusts that only provide escrow services, Erebor has a full commercial banking license and is able to accept deposits and issue loans insured by the US Federal Deposit Insurance Company.

According to Robinhood's (HOOD.US) announcement in October, Erebor obtained a full national banking license from the US Monetary Authority and insurance eligibility from the US Federal Deposit Insurance Company in February 2026. Since then, its deposit size has grown rapidly and has surpassed $7 billion as of September 2026. According to a Bloomberg report on July 2, the bank's deposit amount increased from 1.1 billion US dollars to 4.05 billion US dollars in the previous three months, added nearly 400 new customers, and is expected to achieve profits within the year. Sacra estimates that the bank's annualized revenue for July was approximately $112 million, and its hundreds of capital-intensive customers brought high value per customer.

This rapid expansion is due to its unique market positioning and technical capabilities, enabling it to quickly seize market share in areas undercovered by traditional banking services.

According to data compiled by Woofun AI, SBI Holdings chose to invest in Erebor due to its long-term layout in the crypto sector and its emphasis on the value of the US dollar channel. SBI Holdings is a diversified Japanese financial group that spun off from SoftBank in 1999. Its business scope covers securities, banking, asset management, venture capital, and digital assets. The company has a deep heritage in the cryptocurrency sector: in 2016, it invested in Ripple and co-founded SBI Ripple Asia, also invested in bitFlyer, and launched the licensed exchange SBI VC Trade.

In June 2026, it launched Japan's first trust-based Japanese yen stablecoin, JPYSC, partnered with Circle to promote USDC in Japan, and joined forces with Ripple to promote RLUSD. In October 2026, it completed the acquisition of Japanese cryptocurrency exchange Bitbank. In addition, SBI has invested in Web3 infrastructure projects including Gauntlet, Morpho, and Elliptic. For SBI, Erebor's core value is its ability to provide the US market with an entry/exit channel for the US dollar and stable currency settlement capabilities.

Erebor provides stablecoin deposit and withdrawal services. It has a self-developed core system. It can perform blockchain payments on weekends and outside of regular bank business hours, and also accepts cryptocurrencies as collateral for loans. SBI stated in the announcement that it will further explore and cooperate possibilities, which indicates that the two companies may have points of agreement in terms of inflows and outflows of US dollar stablecoins, cross-border settlement, and institutional customer service, which will help SBI to deepen its penetration into the North American crypto finance market.

Robinhood's entry further boosted Erebor's market valuation. According to Robinhood's October 21 announcement, Robinhood Ventures Fund I (NYSE: RVI) completed the $30 million acquisition of Erebor preferred shares on September 17. RVI is the first fund launched by Robinhood Ventures and was listed on the New York Stock Exchange on March 6, 2026.

As a closed-end fund, it mainly invests in private company portfolios and is open to retail investors without the need to be an accredited investor or meet a minimum investment threshold. RVI President Sarah Pinto said in the announcement that the banking industry still has a lot of room for innovation, and Erebor is expected to become the basic financial infrastructure needed to support America's innovative economy. Previously, in December 2025, Erebor completed a round of financing of 350 million US dollars, with a valuation of 4.35 billion US dollars. Lux Capital led the financing, and institutions such as Founders Fund, 8VC, and Haun Ventures also participated in the investment.

Erebor is currently in talks with investors for a new round of financing, with a target valuation of at least $8 billion, almost double the valuation at the end of 2025. Its current list of investors also includes other well-known institutions such as a16z (Andreessen Horowitz), which shows that top venture capitalists are highly appreciative of the project.

Erebor's technical advantage lies in integrating stablecoins into core banking services rather than just providing cryptocurrency escrow services. It supports the deposit and settlement functions of mainstream stablecoins, including USDC and USDT, and also integrated the Sui network in April 2026 to support stablecoin access and related services. The bank holds a small amount of cryptocurrency to pay gas fees and handle business related to encapsulated stablecoins, but it does not issue stablecoins on its own, but instead focuses on the fields of deposit, settlement, and related services.

However, the operation process also revealed certain risks. In early 2026, Erebor attracted cryptocurrency customers by providing free cash redemption services for stablecoins issued by Circle and Tether, but this policy was used by professional trading institutions to carry out arbitrage, causing losses to banks. Subsequently, Erebor tightened the terms of the service to prevent further arbitrage risks.

This incident reflects the challenges of emerging digital banks in balancing market expansion and risk control. In particular, in the face of high-frequency transactions and professional arbitrators, their system design and risk control mechanisms still need to be continuously optimized.

In the competitive landscape, Erebor faces competition from institutions such as Column, Lead Bank, and Cross River. Column is a nationally chartered US bank with a software-centric, API-first strategy, and its customers include Mercury, Brex, and Ramp. Lead Bank is growing rapidly in the stablecoin sector, launching USDC's entry/exit services and cross-border payment solutions.

Cross River is a bank with a long history that has long provided services to fintech companies and cryptocurrency companies. Its customers include Circle, Coinbase (COIN.US), and Gemini (GEMI.US). Compared to these competitors, Erebor's advantage is that it has its own national banking license, US Federal Deposit Insurance Company insurance coverage, a high level of customer service model, and a focus on innovative technology and cryptocurrency customers, while its disadvantage is that it has a short operating time and is still in the early stages of development.

According to Bloomberg opinion columnist Paul Davis, Erebor replicates Silicon Valley Bank's model of focusing on a single highly volatile industry, and therefore faces the risk of concentration. Senator Elizabeth Warren has also previously expressed concerns about Erebor's speedy license approval process and its political connections. Many media outlets in the industry saw the bank's rise as a sign of a recovery in the crypto-friendly banking industry, but also warned of early operational challenges. This is a key case where regulators and the market are once again examining risk appetite in the crypto banking industry after the Bank of Silicon Valley crisis. Whether Erebor can remain steady in the midst of rapid growth will determine whether it can actually become the “next Silicon Valley Bank” or just a blip.