Abra settles SEC allegations of unregistered securities

Author: Turner Wright, CoinTelegraph; Compiler: Deng Tong, Golden Finance

The U.S. Securities and Exchange Commission announced that cryptocurrency platform Abra has agreed to settle charges that the company failed to register the offer and sale of its lending products.

The regulator said in an August 26 notice that Plutus Lending, doing business as Abra, "neither admitted nor denied the SEC's allegations" and has agreed to pay a court-ordered civil penalty and an injunction prohibiting the company from violating securities laws. The SEC filed charges against the lending platform, alleging that it failed to register the offer and sale of Abra Earn and operated as an unregistered investment company.

“As alleged, Abra sold its own securities while circumventing applicable Investment Company Act provisions that provide many important protections to investors, including minimizing conflicts of interest,” said SEC Deputy Director of Enforcement Stacy Bogert. “This matter is yet another example of how we are guided by economic realities, not superficial labels, when conducting enforcement investigations.”

Settling with Regulators

The SEC alleges that Abra marketed its Earn service as a way for investors to “automatically” earn interest, but instead generated income for itself. The platform began offering Abra Earn to U.S. investors in July 2020 and facilitated approximately $600 million in assets worldwide at its peak.

An Abra spokesperson noted that the platform discontinued the Abra Earn service in 2022 and moved the assets of U.S. users of the service to their Abra Trade accounts in 2023. They added that Plutus Lending "agreed to continue to comply with securities laws."

The SEC notice comes after Abra and its CEO William Barhydt reached a settlement with 25 U.S. state regulators in June for operating without a license. In 2020, the SEC and the Commodity Futures Trading Commission fined Abra $300,000 for offering "security-based swaps" to retail investors without proper registration.