SEC Charges Cryptocurrency Investment Firm Abra for Unregistered Offers and Sales
The U.S. Securities and Exchange Commission (SEC) has filed charges against cryptocurrency investment firm Abra, also known as Plutus Lending LLC, for allegedly conducting unregistered offers and sales of crypto asset securities and functioning as an unregistered investment company. Abra has settled charges related to its Abra Earn service and agreed to pay an unspecified fine. The Abra spokesperson confirmed the settlement and mentioned that the Earn service was closed in 2022. Despite the settlement, no consumers were harmed, and all assets for U.S. Earn customers, including accrued interest, were transferred to their Abra Trade accounts in 2023. Abra still operates in the USA via Abra Capital Management, an SEC-registered investment advisor.
SEC Action Against Abra
- Abra charged for unregistered offers and sales of crypto asset securities
- Functioning as an unregistered investment company
Abra’s Abra Earn Product
- Abra introduced the Abra Earn product to U.S. investors in July 2020
- Allowed investors to deposit crypto assets in exchange for promised variable interest rates
- At its peak, Abra Earn held around $600 million in assets
- Nearly $500 million came from U.S. investors
Securities Violations
- Abra marketed the product as a way to earn interest on crypto assets
- Allegations that Abra used investors’ assets for income and interest payments
- Offerings considered securities and not exempt from registration requirements
SEC’s Allegations
- Abra acted as an unregistered investment company for at least two years
- Issued securities and held over 40% of its total assets in investment securities
Regulatory Crackdown on Abra
Earlier this year, financial regulators from 25 U.S. states settled with Abra and its CEO for operating without licenses. As part of the agreement, Abra agreed to refund up to $82.1 million to customers in those states, and CEO Bill Barhydt faces restrictions on participating in money-related businesses for five years. The recent charges against Abra by the SEC underline the regulatory authority’s approach to the crypto industry, seen in lawsuits against major exchanges such as Binance, Kraken, and Coinbase.
Hot Take on SEC’s Action Against Abra
The SEC’s charges against Abra demonstrate the regulator’s commitment to enforcing securities laws in the cryptocurrency space. This case serves as a reminder to all companies in the industry about the importance of compliance with regulations to protect investors and maintain market integrity.
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