On June 15, the cryptocurrency lending firm Abra faced an emergency cease and desist order from the Texas State Securities Board. The regulatory body, after conducting investigations, concluded that Abra and its affiliates engaged in fraudulent activities and made deceptive claims, as stated in their order.
According to the regulator, Abra has been accused of making misleading statements by falsely portraying itself as a “crypto bank,” despite the fact that neither Abra nor its affiliated entities possess a Texas bank charter. Moreover, they are not authorized to conduct operations in Texas and do not offer Federal Deposit Insurance Corporation (FDIC) deposit insurance.
In addition, the securities board stated that Abra and its affiliated entities engaged in covert transfers of assets to Binance.com, with a reported balance exceeding $118 million as of February 2023. The board also highlighted Abra’s failure to disclose the ongoing legal actions by the U.S. Securities and Exchange Commission and, Commodity and Futures Trading Commission against Binance and related parties, resulting in misleading representation of information to its customers.
In its filing, the regulator detailed multiple occurrences where Abra was found to have made fraudulent and deceptive statements. Additionally, during its investigation on March 31, 2023, the regulator discovered that the various entities associated with Abra were either collectively insolvent or on the verge of insolvency.
The regulatory authority has issued orders to Abra and its affiliated companies and CEO, instructing them to stop participating in fraudulent offerings and making misleading statements in Texas. The orders also request that Abra and related parties pay a penalty and reimburse customers.
Although the regulator does not specify the required modifications to Abra’s services, it is worth noting that Abra Earn was discontinued during the Texas State Securities Board’s investigations in October 2022, while Abra Boost continues to be accessible to accredited and institutional investors in the United States.
The order identifies Plutus Financial, operating under the name Abra, along with Abra Boost LLC and Abra CEO Bill Barhydt as the subjects of the filing. Abra and Barhydt have yet to issue a public response regarding the filing.
