Crypto trading platform Abra and its CEO have agreed to repay up to $82 million in assets to customers as part of a settlement with 25 state financial regulators for operating without state licensing.
The agreement was announced Wednesday by the Conference of State Bank Supervisors. Abra shut down its U.S. app last June, and at the time, stopped accepting crypto from U.S. Abra Trade customers and stopped making crypto available in the U.S. for buying, selling or trading.
Abra must refund any remaining virtual assets on its platform for U.S. Abra Trade customers in the settling states; and CEO Bill Barhydt is now prohibited from involvement in any money transmitter or money services business in those states for the next five years.
“State financial regulators take their role to protect consumers and prevent unlicensed activity seriously,” said CSBS Chair and Washington State Department of Financial Institutions Director Charlie Clark in a prepared statement. “Companies that do not operate within the bounds of state laws will be held accountable.”
Barhydt posted on Twitter that it was “[b]usiness as usual at Abra” Wednesday, highlighting that both Abra Private — for private clients — and Abra Prime — for institutional investors — are both fully operational in the U.S., with Securities and Exchange Commission approval to operate as a registered investment advisor.
Abra launched Abra Prime and Abra Private in April.
“Back in January we announced settlements with Texas and certain state securities regulators around Abra Earn. Today we've finished the last piece of this by signing a term sheet with state MT regulators,” Barhydt tweeted. “25 states have signed on to participate in that agreement. Since Abra stopped offering the app over a year ago in the US this agreement doesn't directly affect any of you. No penalties are being paid as part of this agreement as no users were harmed in any way.”
“Since we wound down the App over 99% of funds have been claimed (well over $250M in assets.) Abra has returned all but ~$2M waiting to be claimed from Abra App users in the US - once again the press got this completely wrong,” he wrote.
States participating in the settlement are Alaska, Alabama, Arizona, Arkansas, Connecticut, District of Columbia, Georgia, Idaho, Iowa, Maine, Minnesota, Mississippi, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Vermont, Washington and West Virginia.
The states learned of Abra’s unlicensed operation last summer, according to the CSBS, when they received a referral from state securities regulators who themselves became aware of the unlicensed activity when investigating unregistered securities activity. Both sets of regulators worked “on a parallel path to settlement,” according to the CSBS.
Each state agreed to forgo imposing a monetary penalty of $250,000 per jurisdiction to ensure customer repayment.
