The Texas State Securities Board has taken action against cryptocurrency lending firm Abra by filing an emergency cease and desist order on June 15, 2023. The regulatory agency has accused Abra and its related parties of committing fraud and making misleading statements.
The regulator has found that Abra made fraudulent statements by referring to itself as a “crypto bank,” which is not true. Abra and its companies do not have a Texas bank charter, are not licensed to operate in Texas, and do not provide FDIC deposit insurance. The securities board stated that Abra transferred holdings to Binance.com secretly, and held over $118 million on the platform as of February 2023. The regulator also accused Abra of failing to disclose ongoing cases against Binance and related parties by the U.S. Securities and Exchange Commission and Commodity and Futures Trading Commission, thereby misleading its customers.
The filing by the regulator cites numerous other instances in which Abra made fraudulent and misleading statements. The investigation by the regulator found that Abra’s various parties were collectively insolvent or nearly insolvent during its probe on March 31, 2023.
The regulator’s order requires Abra’s various companies and CEO to stop fraudulent offerings in Texas and refrain from making misleading statements. The regulator also seeks to have Abra and related parties pay a fine and return funds to customers. However, the regulator did not specify how Abra should change its offered services.
Abra Earn was discontinued during the investigation by the Texas State Securities Board in October 2022, while Abra Boost remains available to accredited and institutional investors in the U.S. The regulatory filing specifically names Plutus Financial, which does business as Abra, Abra Boost LLC, and Abra CEO Bill Barhydt as the targets of the order.
Abra and Barhydt have not responded publicly to the filing. Furthermore, the company did not respond to CryptoSlate’s request for comment at the time of writing.
The cease and desist order issued by the Texas State Securities Board against Abra highlights the importance of regulatory compliance in the cryptocurrency industry. The use of fraudulent and misleading statements to deceive customers can have serious consequences for companies in the crypto space. Therefore, it is essential that crypto firms operate transparently and comply with all regulatory requirements to avoid legal action by regulators.