U.S. SEC Settles with Abra Over Unregistered Sales of Securities

As a seasoned researcher with years of experience in the ever-evolving digital finance landscape, I can’t help but feel a sense of deja vu when reading about Abra’s latest settlement with the SEC. The crypto world has always been a wild frontier, and it seems that even the most established platforms are finding themselves navigating the complexities of securities regulations.

According to reports from Monday, Abra has reached an agreement with the U.S. Securities and Exchange Commission regarding allegations that Abra Earn, managed by Plutus Lending’s platform, was improperly marketed to customers. This is because the product, as per the SEC, falls under the category of a security that should have been registered prior to sale.

2020 marked the introduction of Abra Earn, a crypto investment platform and lending service, to its customers. The offering promised substantial returns by utilizing customer assets, according to the SEC’s complaint. At its peak, the program amassed approximately $600 million, with nearly half coming from U.S. investors. However, for at least two years prior, Abra functioned as an investment company without registering, the SEC alleged.

The company, choosing not to confirm or deny the accusations, chose to comply with a ban on breaching United States securities-registration laws, and will face any financial penalties a court decides upon. This action follows a previous settlement with 25 states for conducting business without necessary licenses. They have agreed to refund as much as $82 million to their U.S.-based customers.

In a statement, Stacy Bogert, an associate director at the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement, noted that Abra had sold approximately $500 million in securities to American investors without adhering to registration regulations intended to guarantee investors have adequate and precise information to make informed investment decisions. She further stated that the SEC operates based on “economic realities, not superficial labels.”

A lawyer representing Abra didn’t immediately respond to a request for comment.

On Mondays events, I find myself participating in the resolution of a second SEC settlement for Abra, following an agreement in 2020 where they consented to pay $150,000 each to both the SEC and the Commodity Futures Trading Commission. This settlement concluded an investigation into their swaps product.