Unions drag US Treasury to court for giving Elon Musk’s D.O.G.E read-only access to data
A powerful group of unions has declared war on the US Treasury Department, filing a lawsuit to stop Elon Musk’s Department of Government Efficiency (D.O.G.E) from accessing sensitive financial and personal information yesterday.
The unions want an immediate court order slamming the brakes on Elon’s access to federal payment systems, saying the Treasury illegally handed Elon’s team the keys to the nation’s confidential data, including records tied to taxpayers, federal employees, and companies.
The lawsuit was filed after Scott Bessent, who now heads the Treasury, approved the access, which the unions are saying violates federal privacy protections and places all Americans at risk. In the lawsuit, they demand that any data already collected by D.O.G.E be retrieved and locked away for good.
Elon’s team has been on a mission to sniff out waste in government spending and drag federal tech systems into the 21st century ever since President Donald Trump signed an executive order for D.O.G.E on Jan. 22nd.
Treasury payment systems at the center of controversy
According to the union’s lawsuit, those systems process more than 1.2 billion federal transactions annually, covering everything from Social Security benefits to Medicare payments and defense contracts.
The complaint claims that Elon’s access was granted just after David Lebryk, Treasury’s acting Deputy Secretary, suddenly quit after working in the Treasury for years, helping oversee its payment processes. The unions are using his departure as evidence that something isn’t right.
“Our members’ privacy is being violated, and once that damage is done, you can’t undo it,” their court filing said. Treasury officials aren’t exactly scrambling to apologize. In fact, they’re defending the decision, claiming Elon’s team only has “read-only” access to “coded data.”
According to a report from Fox Business, a Treasury spokesperson told Congress that the access is necessary for operational reviews but won’t impact payments or give D.O.G.E control over the system. “No valid payment requests have been blocked or delayed,” they said.
Congress demands answers on Elon’s growing power
Democrats in Congress, led by Senator Patty Murray, are coming down hard on the Treasury for letting Elon’s hands anywhere near government finances. “Why should we believe them when Elon is bragging on X (formerly Twitter) that D.O.G.E could shut down payments to organizations he doesn’t like?” Murray asked.
She was referring to Elon’s online posts suggesting that D.O.G.E could halt payments to a Lutheran charity if it wanted to. Treasury’s defense? Tom Krause, the CEO of Cloud Software Group and a key member of D.O.G.E, is working as a special government employee under less strict ethical guidelines than full-time federal employees.
Treasury Secretary Bessent says Krause’s role is standard and involves reviewing payment systems to make them more efficient. “He has read-only access, similar to external auditors,” the Treasury’s statement reads.
Rep. Maxwell Frost took it further by showing up at the Treasury, demanding the same access Elon’s team got. “We’re here on behalf of our constituents,” Frost posted on X. “Let us in.” His stunt didn’t work. Steven Cheung, White House communications director, mocked him in fact, calling him “just another example of Democrats chasing social media clout instead of solving problems.”
James Whitfield is markets correspondent at BTCNews. He spent eight years on the equity desk at Bloomberg London before moving to digital assets in 2020, and now leads our daily coverage of spot prices, derivatives and ETF flows. James reads order books for breakfast and has been quoted in the Financial Times, CityAM and CoinDesk. He is a CFA Level III candidate and is based in the City of London.
Erebor’s $9.5B valuation points to crypto demand, and more scrutiny
Crypto-friendly bank Erebor is reportedly in advanced talks to raise $1.5 billion at a $9.5 billion valuation, the Financial Times reports. That would nearly double its private-market valuation in only a few months. Eye-catching? Absolutely. But the number does not prove that the broader crypto market has recovered. My take: it shows something narrower, and arguably more important. Major investors are willing to fund a bank built for digital-asset companies while regulators keep a close eye on the sector.
The tech-focused lender is only about a year old, yet investors are already lining up behind it. The Financial Times says Lux Capital, Human Capital, Valor Equity Partners, Andreessen Horowitz, and SV Angel are expected to commit to the round. Existing backers 8VC and Haun Ventures may join them. Erebor’s deposits climbed from $1.1 billion at the end of March to $4.6 billion at the end of July, according to the same report. That is rapid growth. It brings in money quickly—and creates a much larger regulatory target.
Erebor is targeting businesses in crypto, artificial intelligence, defense, and manufacturing. The bank also plans to work with payment companies and investment funds. Trading firms are part of the picture, too. Its planned services include deposits, credit, stablecoin products, treasury management, and payments. Erebor is trying to solve a basic problem: crypto companies have often struggled to find dependable banking relationships. That problem is real. The solution still has to survive scale.
The bank received final U.S. approval to begin operations in February. For its first three years, regulators require it to keep a leverage ratio of at least 12%, the Financial Times reports. That requirement matters more as the balance sheet expands. The proposed funding would give Erebor more capital to meet it. Still, capital is not a substitute for controls. Skip that distinction, and the valuation becomes a distraction.
Erebor’s proposed valuation has risen from $4.35 billion earlier this year to $9.5 billion. The jump suggests that institutional investors are getting more comfortable with financial companies tied to crypto. I would not treat it as a market forecast. Venture investors can identify an early opportunity. They can also be wrong. Most bullish commentary skips that second possibility.
The MicroStrategy example is often cited by crypto optimists. The company began accumulating Bitcoin in August 2020. Bitcoin later reached $69,000 in November 2021, according to historical market data. That does not mean Erebor will follow the same path. Counter to the usual comparison, the more useful lesson may be about timing. Infrastructure companies can grow before wider participation arrives, but that relationship is never guaranteed.
More capital also means closer scrutiny. Erebor’s 12% leverage requirement shows how cautious regulators are with banks that work closely with crypto businesses. Clear limits can reassure institutions. But a major failure at Erebor could give regulators another reason to tighten rules for similar banks. Is the scrutiny overkill? For a young bank growing this quickly, no.
The SEC’s lawsuits against major exchanges show how quickly regulatory action can affect the market. Staking rules have also created uncertainty around ETH, which remains below its all-time high of $4,891.70 despite what market analysts call strong fundamentals. Erebor is neither a token nor an exchange. Even so, its record could shape how officials assess other banks serving crypto companies. Yes, that is a different category. Regulators may still draw lessons across categories.
Erebor is moving into lending, too. According to the Financial Times, it arranged a $200 million credit facility for nuclear startup Valar Atomics with JPMorgan, Crescent Cove, and Hercules Capital. The deal itself is fairly ordinary, despite Erebor’s unusual customer base. The partnership matters because it links crypto-focused banking with established lenders. We should not oversell it. It is a connection, not proof of a wholesale banking shift.
What this means
The proposed fundraising gives Erebor a vote of confidence from institutional investors, but the money still has to deliver results. Investors appear to see value in a bank connecting traditional finance with digital assets. If Erebor executes its plans, crypto companies could gain easier access to deposits and credit. Payment services could improve as well. Stablecoin issuers and DeFi businesses might benefit from more liquidity, although that outcome remains far from certain. I’ll be honest: the valuation headline says less than the operating numbers will.
The next details worth watching are Erebor’s stablecoin products, treasury-management services, partnerships, and deposit figures. Those will tell us more than the valuation headline. Why does this matter? Because deposits and actual service usage show whether demand is durable. They may also affect how useful tokens such as USDC and USDT become for everyday payments and other financial transactions.
Erebor’s expansion will show whether it can grow without losing control of its risks. Stablecoin or lending announcements will matter, but so will the quieter numbers. Are deposits growing at a manageable pace? Can the bank keep its leverage ratio above the required 12%? Can it avoid the operational problems that often appear when a young company expands too fast? My view: the boring metrics are the real test.
If Erebor performs well, other crypto-friendly banks may find it easier to win approval and build similar services. Digital-asset companies would then have more ways to move money into and out of the financial system. Problems at Erebor would send the opposite signal. Investors should watch Federal Reserve and OCC updates on banking charters for similar firms. Coinbase’s next earnings report may also show whether institutional interest is becoming real revenue for the crypto industry. We tried optimism before. It broke when the plumbing failed.
FAQ
What is Erebor’s current valuation?
Erebor is reportedly negotiating a $1.5 billion funding round at a $9.5 billion valuation, according to the Financial Times.
Which investors are participating in this funding round?
Lux Capital, Human Capital, Valor Equity Partners, Andreessen Horowitz, and SV Angel are expected to make large commitments. Existing investors 8VC and Haun Ventures may participate as well, the Financial Times reports.
What services does Erebor offer?
Erebor plans to provide deposits, credit, stablecoin products, treasury management, and payment services, according to the Financial Times.
What regulatory requirements does Erebor face?
Regulators require the bank to maintain a leverage ratio of at least 12% during its first three years of operation, the Financial Times says.
How has Erebor’s deposit base grown?
Erebor’s deposits rose from $1.1 billion at the end of March to $4.6 billion at the end of July, according to the Financial Times.
What does Erebor’s valuation signal for the crypto market?
The increase suggests that some institutional investors are more comfortable backing banks that work with digital-asset companies. My take: it is one useful data point, not proof that the entire crypto market is entering another boom.
How does Erebor’s growth relate to regulatory scrutiny?
Fast growth and a large capital raise give regulators more reason to examine Erebor’s risks. Its performance may affect how officials treat other financial firms built around crypto services.
Has Erebor engaged in traditional finance collaborations?
Yes. Erebor acted as administrative agent for a $200 million credit facility for Valar Atomics alongside JPMorgan, Crescent Cove, and Hercules Capital, the Financial Times reports.
What impact could Erebor’s success have on stablecoins and DeFi?
If Erebor adds banking capacity and liquidity, crypto investors may gain access to more financial products. Stablecoin and DeFi markets could grow, but that depends on the bank’s execution and on future regulation. No shortcut exists.
What should investors monitor regarding Erebor?
Investors should track Erebor’s deposits, new services, lending activity, regulatory updates, and its ability to keep the leverage ratio at or above 12%.
James Whitfield is markets correspondent at BTCNews. He spent eight years on the equity desk at Bloomberg London before moving to digital assets in 2020, and now leads our daily coverage of spot prices, derivatives and ETF flows. James reads order books for breakfast and has been quoted in the Financial Times, CityAM and CoinDesk. He is a CFA Level III candidate and is based in the City of London.
