The US SEC has initiated legal proceedings against Abra, accusing the crypto firm of providing unregistered digital asset services that contravene securities laws.
In the most recent crackdown, the US SEC has charged Abra, a cryptocurrency firm, with providing unregistered digital asset services to its clients. In a recent press release, the US Securities and Exchange Commission announced that Plutus Lending LLC, which operates under the name Abra, has been accused of offering crypto solutions without registering with the agency.
Therefore, we will delve into the report and the allegations against the crypto firm in greater detail.
US SEC Files Charges Against Abra for Cryptocurrency Violations
The crypto firm’s lending product “Abra Earn” is the focus of the agency’s complaint, as indicated in the US SEC press release. The lending product enabled US investors to lend their crypto assets to the company in exchange for interest payments.
According to the agency, the crypto firm began providing this service in July 2020 without registering with the regulatory body. The lending product managed assets worth $600 million at its zenith, with approximately $500 million coming exclusively from US traders.
Amid this, the agency asserted that the company advertised the program as a method for merchants to “automatically” accumulate interest. Conversely, the report stated that the organization has exploited the crypto assets of its investors for its gain.
Furthermore, the agency asserts that the crypto firm violated the exemption from SEC registration by selling securities. Additionally, the allegations encompass the operation of an unregistered investment firm for a period exceeding two years. The report added that the crypto firm issued securities and aided over 40% of its assets in investment securities, including crypto-asset loans to institutional borrowers during this time.
Abra Consents to Resolve US SEC Charges
The most recent enforcement action is a testament to the US SEC’s dedication to overseeing the crypto market and safeguarding investors from hazardous offerings. Stacy Boger, the Associate Director of the SEC’s Division of Enforcement, emphasizes the significance of adhering to registration laws.
He observed that these laws guarantee transparency for market participants as they make investment decisions. Furthermore, Bogert observed that Abra’s actions did not adhere to critical provisions of the Investment Company Act. This company act aims to safeguard investors and reduce conflicts of interest.
In the interim, the crypto firm is accused of violating critical provisions of the Securities Act of 1933 and the Investment Company Act of 1940 in the allegations filed in the US District Court for the District of Columbia. Abra consented to an injunction preventing the company from committing further violations as part of a settlement.
Furthermore, the crypto firm consented to pay civil penalties; however, the precise sum has not yet been determined and will be determined by the court. Previously, Abra has reached a settlement with 25 financial regulators in the United States for operating without a license. This is a noteworthy fact.
In June of this year, the organization consented to restitute approximately $82 million in digital assets to its clients as part of the settlement. This previous action was taken against Abra, its subsidiaries, and CEO William Barhydt, emphasizing the company’s history of regulatory issues.
