Abra Settles with SEC Over Unregistered Securities Allegations

HomeCrypto Exchanges

Abra Settles with SEC Over Unregistered Securities Allegations

The United States Securities and Exchange Commission (SEC) disclosed that Cryptocurrency platform Abra has settled claims that the firm had not registered the offers and sales of its lending product Abra Earn. In an August 26, 2020, notice, the SEC announced that for violating securities laws, Plutus Lending, doing business as Abra, will cease any further violations of securities laws and will pay civil penalties to be decided by a court. For his part, Abra settled the case without admitting or denying the SEC’s allegations.

The SEC accused Abra of not registering the offers and sales of Abra Earn and of operating as an unregistered investment company. Stacy Bogert, the SEC Enforcement Associate Director, accosted Abra for selling its securities and circumventing the protections contained under the Investment Company Act. Bogert stated that the non-specialist enforcement actions of the SEC are based on the economic substance rather than on the formal classification of products.

Also Read: Michael Saylor Says “Bitcoin Rules” During Market Downturn, Shares Controversial Post

Abra’s Regulation Compliance Background

The SEC alleged that Abra marketed its Earn service as a way for investors to earn interest “auto-magically” while instead generating income for the platform itself. Abra launched the Earn service for U.S. investors in July 2020, and at its peak, the service managed approximately $600 million in assets globally. Nonetheless, Abra shut down the Earn service in 2022, and the available assets for users based in the United States moved to the Abra Trade account in 2023. When asked to confirm this information, a representative from Abra affirmed that Plutus Lending will adhere to securities laws in the future.

Advertisement

Recently, there was a notice on the SEC grounds and an earlier June settlement between Abra, its head William Barhydt, and 25 U.S. state regulators about the violation of the law and the absence of a license to operate. The SEC and the Commodity Futures Trading Commission also penalized Abra $300,000 in 2020 for selling “security-based swaps” directly to regular users without approval.

Conclusion

Abra’s recent settlement with the SEC highlights ongoing regulatory challenges in the cryptocurrency sector. As the platform navigates these challenges, regulators and the crypto community will closely watch its commitment to compliance.

Also Read: Litecoin Faces Mounting Challenges as Market Value Plummets

Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.