Abra, along with CEO William “Bill” Barhydt, recently reached a settlement with 25 US state regulators for providing crypto trading services without proper licensing. The settlement, as announced by the Conference of State Bank Supervisors on June 26, involves the regulators waiving monetary penalties in exchange for $82 million in customer repayments. Moreover, Abra has agreed to cease accepting crypto allocations from US customers by June 15, 2023, and to refund US customer balances. Additionally, Barhydt is barred from participating in licensed money services businesses in the states involved in the settlement, although he may remain a passive investor for five years.
Washington was the first state to release its consent order, revealing that 706 users in the state still hold a balance of $116,000.78 on the platform. The state also noted that customers have already received $13.6 million in refunds. The CSBS specifically highlighted the involvement of Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, and Vermont in the settlement, with 18 other states participating as well. It is expected that these other states will issue their consent orders in the coming weeks or months as more may join the settlement.
Abra began winding down its operations in the US in June 2023, discontinuing services for US app users and consumer services. However, the company clarified that its operations outside the US remain unaffected. Despite this, Abra Capital Management, the firm’s institutional service, continues to operate in the US and is registered with the SEC. The decision to wind down in the US coincided with state securities regulators alerting MSB regulators about Abra’s activities in mid-2023, resulting in a push for settlements. For instance, the Texas State Securities Board issued an emergency cease and desist order against Abra for its interest-bearing products, leading to a settlement in January. Similarly, New Mexico’s securities regulator settled with Abra in April.
The settlement between Abra, William Barhydt, and US state regulators marks a significant development in the crypto trading sector. It underscores the importance of regulatory compliance in the industry and the consequences of operating without appropriate licenses. Moving forward, it will be crucial for companies like Abra to adhere to regulations to avoid similar issues and ensure the protection of customer interests.