Crypto exchange Abra settled with the Securities and Exchange Commission on Monday over its alleged failure to register the offers and sale of its lending product Abra Earn and for operating an unregistered investment company.
Abra began offering Abra Earn in 2020 to allow U.S. investors to lend their crypto to Abra in exchange for interest. At its peak, Abra Earn had around $600 million in assets mostly from U.S. investors. The program wound down in 2023.
Abra promised interest on crypto assets “auto-magically,” the SEC said. The commission also alleged that Abra Earn was offered and sold as a security without necessary SEC registration.
“[A]bra sold nearly half a billion dollars of securities to U.S. investors, without complying with registration laws designed to ensure that investors have sufficient, accurate information to make informed decisions before they invest,” Stacy Bogert, associate director of the SEC’s division of enforcement, said in a prepared statement.
“To compound the potential harm to investors, 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,” she said. “This matter reflects yet again that, in conducting enforcement investigations, we are governed by economic realities, not cosmetic labels.”
In a post Monday on X, formerly Twitter, Abra CEO Bill Barhydt said all assets, plus interest, have been returned to Abra Earn customers since the program shuttered, adding that he sees the settlement as an “acceptable outcome.”
“No US retail customers were harmed and none lost any assets via this offering,” Barhydt wrote. “Abra Private now offers digital asset services in the U.S. including both yield and staking services as a registered investment advisor — and is growing nicely.”
Abra Private was launched in April alongside Abra Prime. They serve private and institutional clients, respectively, and both operate with SEC approval as a registered investment adviser.
Abra agreed in June to repay customers $82 million in crypto as part of a settlement with 25 states for operating without a license.
In a statement emailed to Banking Dive, Plutus Lending LLC, a subsidiary of Abra, said, “Without admission of wrongdoing, PLL agrees to continue to comply with securities laws. No consumers were harmed at all by the settlement or wind down of Abra Earn. All assets for US Earn customers including accrued interest were transferred to their Abra Trade accounts in 2023.”
