Meanwhile, the Office of the Comptroller of the Currency is sifting through a growing pile of applications for national trust bank charters from cryptocurrency firms. Circle, Ripple, BitGo, and Erebor applied for theirs earlier this year [I88], and Paxos followed not long after. This month, Coinbase, Stripe’s recently acquired stablecoin firm Bridge, and Crypto.com have all added their applications to the stack. Erebor’s is the first application of the lot to be granted preliminary approval. As I wrote in July:
Another bank called Erebor, which as you might guess by the Lord of the Rings name is backed by Peter Thiel, Joe Lonsdale, and Palmer Luckey, has also applied for a bank charter. According to the Financial Times, the new bank will aim to “fill the gap left by Silicon Valley Bank” — the tech startup-focused bank that failed in March 2023. Around 85% of Silicon Valley Bank’s deposits, mostly belonging to venture capitalists and venture-backed tech companies, were uninsured; the FDIC nevertheless covered those uninsured depositors and spent $20 billion on the whole boondoggle. As is so often the case with “tech visionaries”, yesterday’s warning lesson is tomorrow’s blueprint.
A statement by Comptroller Jonathan Gould suggests that the approval was at least partially motivated by a desire to cast off accusations from the crypto industry that government agencies had targeted it for “debanking”. In a statement, Gould announced that the approval “is also proof that the OCC u
![Andrew Cuomo seems to be in the “panicked flailing” portion of his NYC mayoral campaign. Besides posting (and then quickly deleting) an astonishingly racist AI-generated “criminals for Mamdani” spoof video33 and suggesting his opponent would revel in another terrorist attack on the city,34 Cuomo has signaled his distress in another way: by trying to appeal to the crypto industry. Perhaps hoping for a last-minute infusion of cash, à la the New Jersey gubernatorial race earlier this year [I85], Cuomo has announced plans to bolster the tech sector in the city, including by installing an “Innovation Council” headed by crypto, biotech, and artificial intelligence executives.35
This helped draw an endorsement from a tiny PAC called Innovate NY, which issued an enthusiastic statement about Cuomo’s “forward-looking economic agenda that leverages blockchain, tokenization, public-benefit stablecoins, and artificial intelligence”.36 The PAC made its first expenditure in the race shortly after, spending $30,000 to disseminate a typo-ridden and evidently AI-generated flyer including false claims about Mamdani’s platform and suggesting he would endanger the city.
Innovate NY is headed by Edward Cullenb of Tennessee, who is also the CEO of a company that plans to issue The Catholic Token™.](https://media.hachyderm.io/media_attachments/files/115/454/009/648/059/887/original/6daa90ae467a96fb.png)
![In the states
Nevada’s Financial Institutions Division (NFID) has issued a cease and desist order against Fortress Trust [W3IGG], a crypto custody company founded by Scott Purcell. Purcell had previously founded Prime Trust, which filed for bankruptcy in 2021 after raising tens of millions in seed funding, giving half of it to executives, and then promptly losing a hardware wallet storing customer funds [I31, 38]. The company’s bankruptcy filing came only after the firm was placed into receivership by NFID, which alleged they were insolvent and ordered them to halt operations.
Now, NFID is ordering Fortress Trust to halt operations because — you guessed it — Fortress is “on the verge of insolvency”. NFID elaborates that Fortress has about $1.3 million in custodial assets, but they owe clients around $12.3 million; and have acknowledged that they “failed to safeguard assets under its custody and is unable to meet all customer withdrawals”. (I’m not quite sure why NFID describes this as merely “on the verge” of insolvency.)29 Fortress previously made it to this newsletter in September 2023 after suffering a $15 million theft. At the time, Fortress announced it would be acquired by Ripple, which had agreed to cover the losses; however, the deal fell through later that month [I39, W3IGG]. It’s not clear how — or if — Fortress ever plugged that hole.
Fortress is a state-chartered trust company — the very same category of company that the SEC just greenlighted to serve as crypto](https://media.hachyderm.io/media_attachments/files/115/454/004/647/251/173/original/6b08fa7fb02ecad0.png)
![Meanwhile, the Office of the Comptroller of the Currency is sifting through a growing pile of applications for national trust bank charters from cryptocurrency firms. Circle, Ripple, BitGo, and Erebor applied for theirs earlier this year [I88], and Paxos followed not long after. This month, Coinbase, Stripe’s recently acquired stablecoin firm Bridge, and Crypto.com have all added their applications to the stack. Erebor’s is the first application of the lot to be granted preliminary approval. As I wrote in July:
Another bank called Erebor, which as you might guess by the Lord of the Rings name is backed by Peter Thiel, Joe Lonsdale, and Palmer Luckey, has also applied for a bank charter. According to the Financial Times, the new bank will aim to “fill the gap left by Silicon Valley Bank” — the tech startup-focused bank that failed in March 2023. Around 85% of Silicon Valley Bank’s deposits, mostly belonging to venture capitalists and venture-backed tech companies, were uninsured; the FDIC nevertheless covered those uninsured depositors and spent $20 billion on the whole boondoggle. As is so often the case with “tech visionaries”, yesterday’s warning lesson is tomorrow’s blueprint.
A statement by Comptroller Jonathan Gould suggests that the approval was at least partially motivated by a desire to cast off accusations from the crypto industry that government agencies had targeted it for “debanking”. In a statement, Gould announced that the approval “is also proof that the OCC u](https://media.hachyderm.io/media_attachments/files/115/454/000/840/660/451/original/140c9289e167a401.png)
![Some pro-crypto Senate Democrats have reportedly blown up at the crypto executives in these meetings, urging them: “Don’t be an arm of the Republican Party — they used you and your megaphones to fuck us.”15 This was likely in response to the recent leak by Senate Republicans of a Democratic draft proposal to regulate decentralized finance, which sparked dramatic backlash from crypto industry figures who fear it would effectively outlaw defi. Paradigm lobbyist Alexander Grieve bashed the proposal as “worse than anything Gensler cooked up”,16 and industry advocate Jake Chervinsky described it as “basically a crypto ban”.17
Other Democrats have expressed annoyance at Republicans for pushing them to agree to a markup date without having had much time to negotiate the draft. “Democrats have shown up ready to work but our Republican counterparts are crashing out,” said a staffer for Arizona Senator Ruben Gallego. “Their demand to set a markup date before text is agreed to is like setting a wedding date before the first date. It’s nonsensical.”18 But the Republicans are feeling the time crunch. A source familiar with the meetings, speaking to Decrypt, said, “[T]he Republicans are like: ‘If we don't move this in November, we don't get it done by the end of the year, then the whole thing derails.’”19](https://media.hachyderm.io/media_attachments/files/115/453/994/661/740/441/original/1ffbb2bd30ce3521.png)
![In the courts
Fellow crypto felon Sam Bankman-Fried has been working to rehabilitate his image as he prepares for his upcoming appeal hearings. He’s spent the last 19 months or so in prison after being found guilty on all counts in the FTX fraud trial, though he has continued to maintain his innocence. Since Trump’s election, he’s attempted to jump on the same bandwagon of complaining that his prosecution was based on not on the billions of dollars in customer funds he illegally squandered and his other various crimes, but instead on “Biden’s anti-crypto SEC/DOJ [that] went after me”. Earlier this year, SBF used prison interviews with the New York Sun and Tucker Carlson to spread his message [I78, 79]; now he’s proxying social media posts through a friend on the outside. Though once known as a Democratic megadonor, Bankman-Fried has begun emphasizing his history of dark-money contributions to Republicans, posting, “In 2020, I was center-left. By 2022—having seen Gensler/Biden's DOJ on crypto—I was a centrist, and (privately) donated tens of millions to Republicans.”7’
Bankman-Fried seems to be angling for a pardon of his own if his appeal is unsuccessful, though whether Trump would oblige is less clear. Unlike CZ, who is one of the wealthiest men in the world and continues to be a powerful and relatively well-liked figure in the crypto industry, Bankman-Fried is staring down the remainder of a 25-year prison sentence, with few assets to his name, high-profile links to Democr](https://media.hachyderm.io/media_attachments/files/115/453/988/112/227/164/original/ab134d2a15e6bf68.png)
