Coinspeaker
Abra Agrees to Settlement in Multi-States Securities Probe
Cryptocurrency platform Abra has decided to settle with the United States Securities and Exchange Commission (SEC) over allegations of unregistered securities. For context, Abra allegedly pushed its Earn product, which qualified as securities, to customers without registering it appropriately.
Abra Misled American Citizens
Abra began pushing this Earn product to its customers four years ago, asking them to provide their assets for use while they receive high returns as rewards. The regulator classifies this action as misleading. Eventually, the company started phasing out the Abra Earn program and advised its US customers to withdraw their crypto assets from the platform in June 2023.
According to the SEC’s filing, the Abra Earn program had up to $600 million; the largest part of this fund ($500 million) came from US investors. Also, for the most significant part of its operation, Abra acted as an unregistered investment company.
The firm did not admit or deny any of the allegations that the SEC levied. Instead, it consented to the prohibition of violating the US securities registration rules, accepting all penalties that the court deems appropriate. This is not the first country in which Abra has had such settlements with regulators.
In the four years of its operation, the company has settled with about 25 states for operating without licenses. In June this year, it agreed to return as much as $82 million to customers in the United States. This follows investigations that revealed Abra operated without required licenses in states like Washington, Texas, Georgia, and Ohio. Authorities in these regions opted to prioritize customer reimbursements over imposing fines.
Even this recent action is the firm’s second settlement with the SEC. In 2020, Abra agreed to pay $150,000 to the securities regulator and the Commodity Futures Trading Commission (CFTC) over a swaps product investigation.
Stacy Bogert, associate director of the SEC’s Division of Enforcement, stated that “Abra sold nearly half a billion dollars of securities to US investors without complying with registration laws designed to ensure that investors have sufficient, accurate information to make informed decisions before they invest.”
She noted that the agency is governed by “economic realities, not cosmetic labels”.
New Jersey AG Advises Citizens to Opt-Out of Abra
A few weeks ago, the Attorney General of the New Jersey Division of Consumer Affairs, Matthew J. Platkin, advised citizens who have invested in the crypto trading and lending company to withdraw their money hastily. The advice is connected to this multi-state investigation into selling unregistered securities.
Similarly, it agreed with New Jersey’s securities agency to pay back all the virtual assets held by the state’s investors on its platform. In this case, the agreement settles claims that Abra illegally sold interest-earning crypto accounts called “Abra Boost” and “Abra Earn” to investors, including over $2.97 million bagged from people living in New Jersey.
