The U.S. securities regulator has settled its charges against Plutus Lending LLC, operating as Abra, related to the offering and selling of unregistered crypto asset securities through its crypto lending product, Abra Earn.
The Securities and Exchange Commission (SEC) had initially filed these charges in July 2020.
According to the SEC, Abra also operated as an unregistered investment company. The charges stemmed from Abra’s yield-earning service, which allowed U.S. users to earn interest on their crypto assets. The SEC alleged that Abra used customer digital assets to generate income for itself and fund interest payments while offering and selling securities that did not qualify for an exemption from SEC registration.
To settle the charges, Abra agreed to an injunction prohibiting it from violating the registration provisions of the Securities Act and the Investment Company Act. Without admitting or denying the SEC’s allegations, it also agreed to pay civil penalties, the amounts of which will be determined by the court.
Abra Earn, which has since been discontinued, reportedly brought in nearly $600 million in crypto assets, with $500 million of that coming from U.S. customers.
Earlier in June, Abra agreed to settle with 25 state financial regulators over allegations of operating without proper licensing.
The settlement requires Abra and its CEO William Barhydt to halt their crypto-related services for U.S. Abra Trade customers and return $82 million in virtual assets to its customers.
The agreement involves regulators from Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, Vermont, and Washington State. These regulators found that Abra operated a mobile application for buying, selling, trading, and investing in crypto without the necessary licenses.
Associate Director of the SEC’s Division of Enforcement, Stacy Bogert, commented on the case, stating, “Abra sold nearly half a billion dollars of securities to U.S. investors, without complying with registration laws designed to ensure that investors have sufficient, accurate information to make informed decisions before they invest.”
In a statement, an Abra spokesperson said that Abra has agreed to settle the SEC’s action regarding Abra Earn, stressing that no consumers were affected by the settlement or the wind-down of the service. The spokesperson also noted that all assets for U.S. Earn customers, including accrued interest, were transferred to their Abra Trade accounts in 2023. Abra continues its U.S. operations through Abra Capital Management, an SEC-registered investment advisor.
In addition to the SEC action, the Texas State Securities Board filed an enforcement action against Abra and its CEO in June 2023, alleging securities fraud related to Abra Earn.
