Abra Reaches Settlement with SEC Over Unregistered Securities Violations

Key takeaways:

• Abra has reached a settlement agreement with the US SEC in response to accusations that it failed to register the offers and sales of its loan product.
• The lending platform was charged by the SEC for operating as an unregistered investment business and failing to register Abra Earn’s offers and sales.

The crypto platform Abra has reached a settlement agreement with the US Securities and Exchange Commission (SEC) in response to accusations that it failed to register the offers and sales of its loan product.

The regulator stated in a statement dated August 26 that Plutus Lending, operating under the name Abra, had consented to pay civil fines that would be decided by a court and an injunction that would prevent the company from breaking securities laws “without admitting or denying the SEC’s allegations.” 

The lending platform was charged by the SEC for operating as an unregistered investment business and failing to register Abra Earn’s offers and sales.

According to the SEC, Abra made money for itself by marketing its Earn service as a means for investors to earn interest “auto-magically.” In July 2020, the platform started providing Abra Earn to US investors. At its height, it was facilitating assets worth about $600 million worldwide. Stacy Bogert, associate director of SEC enforcement, stated:

“Abra allegedly sold its own securities while skirting applicable Investment Company Act provisions that provide a number of important protections to investors, including minimizing conflicts of interest,”

In 2022, the platform terminated Abra Earn, and in 2023, it moved the assets of US-based users of the program to their Abra Trade accounts. They further stated that Plutus Lending pledges to uphold securities regulations going forward.

The CEO of crypto platform Abra, William Barhydt, has agreed to settle with the Oregon Division of Financial Regulation. As part of the settlement, Abra will stop selling unregistered securities in Oregon and restore any money that consumers from the state may have left on the site. 

The US-based company’s withdrawal from the US market is currently in its latest phase. At least five states have taken legal action against companies that sustain the Abra ecosystem, with Oregon being the latest to do so. About its interest-bearing bitcoin depository accounts, Abra Earn and Abra Boost, Oregon, accused Abra of violating state securities laws.