18 months is about reasonable for a CU. You can open one for under 100k, licenses, access to SWIFT, ability to issue FDIC insured loans at a huge spread. It's no surprise he's getting audited. He's dealing in a contentious ...commodity?currency? (I think the IRS deemed it as currency.) Either way, given the negative publicity that surrounded bitcoin during its emergence (passports and guns for sale? I mean I'm fairly libertarian, but transacting in that currency is just baiting some employee fresh out of law school looking to make his name memorable enough to win when he runs for the junior senator seat a few years down the line.) Combine that with the fact that new businesses tend to get audited far more often than your average MNC who has rigorous accounting journaling procedures in place to ensure they're compliant with the law, thus making him a double-easy target. The NCUA will not give you a heads up if they're going to perform an audit any more than the IRS would.

The archive.org is an important project. This dude seems like a genuinely nice guy who's trying to go out of his way to help the little guy. In fact, I try to bank exclusively with the little guy (check my posting history re: that schpeal). "Mr. Modell and Mr. Kahle said the red flags raised by the N.C.U.A. examiners had been over small discrepancies and record-keeping issues — and often turned out to be factually wrong." I'm going to guess their risk analysis procedure just flagged his institution with 'red flags' as such: "new financial institution, potential violations here, here, and there." Those small discrepancies are important. You're a monetary institition in charge of what's often the only safety net someone has. Even if the 'small discrepancies' were minor, the risk analysis software seemed to do a good job because they caught the oversight. Small or not, I'd be upset if my interest bearing account wasn't paid to the cent, because it would shatter my trust. Their job is to move money around on time and with a very high degree of regulated precision. (In this hypothetical case, of course) the institution failed to comply with are admittedly sometimes onorous minutia.

On a more positive note, you Silicon Valley buds should all group together and open a credit union. I wasn't joking when I said the initial expense is around 100k followed by a few ten k each year. Here[1] you can do it for 50k if you're effectively online only. Credit is so cheap right now, assuming you can issue out mortgages in the fractional method banks can do (e.g., hold a dollar for every ~10 (or around abouts) you lend out in traditionally safe paper like mortgages), it wouldn't take much for you guys to save a _ton_ of money by charging 0% overhead minus the opex of the CU itself.

Also, re: the 'commonality' it can be anything really. Most famously you have any former member of the US armed forces, their spouses, and their ROOMMATES (if they're active duty IIRC) can join. Its been a long time since I looked at the specifics but the 'common ground' you share can be very vague like "yeah we all hold HAM radio licenses" would be a genuine justification.

[1] http://www.ncua.gov/Resources/Documents/CUDev/AcrobatDocumen..., page 7.