Crypto firm Abra settles with SEC over unregistered securities

The US Securities and Exchange Commission settled with crypto lending platform Abra after accusing the startup of selling unregistered securities to consumers and operating as an unregistered investment company.

Plutus Lending LLC, which does business as Abra, agreed to settle with the SEC without admitting or denying the agency’s allegations. The startup will pay civil penalties that have not yet been determined by the court. Abra Earn allowed retail investors to deposit their crypto assets in exchange for interest. Abra Earn was promoted as a way for individuals to generate profits “automatically”. At its peak, the Abra Earn program had about $600 million in assets, nearly $500 million from U.S. investors, according to an SEC filing Monday.

The complaint alleges that Abra exercised discretion in how it invested consumers’ funds to provide high returns. The complaint added that for at least two years Abra operated as an unregistered investment company because it issued securities and held more than 40 percent of its total assets, excluding cash, in investment securities, including crypto-loans. assets to institutional debtors. In June 2023, Abra began phasing out the Abra Earn program and told US customers to withdraw their assets, according to the SEC.

“Abra allegedly sold nearly half a billion dollars in securities to US investors without complying with registration laws designed to ensure that investors have enough accurate information to make informed decisions before investing,” Stacy Bogert, associate director of the SEC division. execution, the statement says.

Abra’s investors included Amex Ventures, Blockchain Capital and the Stellar Development Foundation. At one point, the startup secured a $500 million valuation. In 2022, crypto lenders offering programs similar to Abra Earn, including BlockFi, Celsius, and Voyager, filed for bankruptcy.

“No consumers have been affected at all by the settlement or liquidation of Abra Earn,” an Abra spokesperson said in a statement. “All assets of US Earn customers, including accrued interest, were transferred to their Abra Trade accounts in 2023. Abra continues to operate in the US through Abra Capital Management, an SEC-registered investment adviser.”

Top photo: US Securities and Exchange Commission (SEC) headquarters in Washington, DC, US, Thursday, May 9, 2024. The US Securities and Exchange Commission is reviewing statements that Boeing Co. made them about its safety practices following a tragic near-miss in January aboard one of its 737 Max 9 planes.

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