The Texas State Securities Board has filed an emergency cease and desist order against Abra, a cryptocurrency lending firm, on June 15. Based on its investigations, the regulator found Abra and related parties committed fraud and made misleading statements. Abra had suggested it was a “crypto bank”, but it does not have a Texas bank charter, is not licensed to operate in Texas, and does not provide FDIC deposit insurance.
The regulator also found that Abra and related parties “secretly” transferred holdings to Binance.com and held over $118 million on the platform as of February 2023. Abra had failed to disclose the U.S. Securities and Exchange Commission’s and Commodity and Futures Trading Commission’s ongoing cases against Binance and related parties, misleading customers.
Abra made numerous other fraudulent and misleading statements, according to the regulator’s filing. During the investigation on March 31, 2023, Abra’s various parties were “collectively insolvent or nearly insolvent”. The regulator has ordered Abra’s various companies and CEO to cease and desist from engaging in fraudulent offerings in Texas and from making misleading statements. It also seeks to have Abra and related parties pay a fine and return funds to customers.
Abra’s response and future plans
Abra Earn was discontinued amidst the TSSB’s investigations in October 2022; Abra Boost remains available to accredited and institutional investors in the U.S. The regulator did not specify how Abra should make changes to its offered services.
Plutus Financial, which is doing business as Abra, Abra Boost LLC, and Abra CEO Bill Barhydt have not responded to the filing publicly. The company did not respond to CryptoSlate’s request for comment at press time.
As of now, it is unclear what the future holds for Abra. The company may need to make significant changes to its business practices to continue operating in Texas. It may also face consequences from other regulators in different states or countries. Abra’s customers may also lose trust due to the allegations of fraud and misleading statements.