The US Securities and Exchange Commission announced Monday that cryptocurrency lender Abra has reached a settlement with the agency. The settlement concerns allegations that Abra improperly advertised Abra Earn to customers as a product that should be registered as a security.
According to the SEC, starting in 2020. Abra aggressively promoted Abra Earn, promising high returns on the use of customer assets. At its peak, Abra Earn managed about $600 million in assets, of which nearly $500 million came from US investors.
The complaint also mentioned that in June 2023. Abra began phasing out the Abra Earn program, advising its US clients to withdraw their cryptocurrency assets from the platform.
SEC takes aim at Abra for alleged unregistered sales and misleading promises
The SEC complaint further accuses Abra of promoting Abra Earn, claiming it allowed investors to easily earn interest on their crypto assets. Allegedly, Abra used its authority to distribute these assets in various ways to generate income for itself and fund interest payments.
In addition, the complaint claims that Abra Earn was advertised and sold as a security. However, it did not meet the criteria for exemption from SEC registration requirements.
The SEC also alleges that Abra operated as an unregistered investment company for at least two years. This was because Abra allegedly issued securities and invested more than 40% of its non-cash assets in securities. These investments included loans of crypto assets to institutional borrowers.
“As alleged, Abra sold nearly half a billion dollars’ worth of securities to U.S. investors without complying with registration regulations designed to provide investors with sufficient, accurate information to make informed decisions before investing,” – Stacy Bogert, deputy director in the SEC’s Division of Enforcement, said.
Abra agrees to pay $82 million to settle licensing disputes in multiple states. Earlier this month, New Jersey regulators encouraged investors to remove any remaining crypto assets from their Abra accounts.
Earlier in June, 25 U.S. states negotiated a settlement with Abra and its CEO for failing to obtain the required licenses.
As a result, Abra agreed to reimburse customers in those states up to $82.1 million. Significantly, states such as Washington, Texas, Georgia and Ohio waived financial penalties in favor of providing compensation to customers.
