The Texas State Securities Board (TSSB) has taken legal action against Abra and its CEO, William John “Bill” Barhydt.
Investors of Abra Earn and Abra Boost have accused the defendants of fraudulent business practices and securities fraud. According to the TSSB, the defendants intentionally withheld crucial financial information, such as party capitalization, loan defaults, and asset transfers, to Binance.
These businesses were either already insolvent or on the brink of bankruptcy by March 31, 2023. The TSSB Enforcement Division has issued a Notice of Hearing and an Emergency Cease and Desist Order.
The accusation against the respondents is that they sold Abra Boost exclusively to accredited investors while selling the Earn product to accredited and non-accredited investors.
Participants’ digital assets were allegedly transferred to interest-bearing accounts with potential interest rates of up to 10%. The defendants were warned by the TSSB Enforcement Division, but they didn’t stop selling the Earn product.
They kept selling it until at least October 2022, with a particular focus on the Boost product. They relied on Regulation D, Rule 506, to bypass investor protection laws.
The enforcement actions allege that the respondents concealed crucial facts from Abra Boost shareholders. These facts include party capitalization, operational history, and loan defaults collateralized by investors’ assets.
On June 11, 2023, an official social media outlet associated with the holding firm claimed that “Abra is not bankrupt,” despite the businesses being insolvent or close to insolvency as of March 31, 2023.
