Abra Hit With Cease-and-desist Order

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  • Crypto lending firm Abra had been hit with a cease-and-desist order by the Texas State Securities Board
  • The TSSB claims that Abra has been “insolvent or…nearly insolvent” since March 31
  • The platform and its founder are accused of securities fraud

Crypto lending firm Abra had been hit with a cease-and-desist order by the Texas State Securities Board (TSSB), which has accused the platform and its founder William Barhydt of committing securities fraud. Barhydt has also been accused of engaging in deception regarding the sale of investment products through its affiliates Abra Earn and Abra Boost. As a result, the TSSB has filed an emergency freeze order against the platform, which is yet to publicly reference the order.

Interest-earning Products Constitute Securities

According to the TSSB, Abra, which launched in 2014 and offers interest-bearing crypto products, has not only been engaging in the sale of unregistered securities but has also been insolvent since March. The TSSB says that it warned Abra that its products contravened securities laws but Abra continued to sell Abra Earn through to October 2022, which it then switched to Abra Boost.

However, the regulator argues that Abra is intentionally concealing material information from Abra Boost investors, including “the capitalization and operational history of parties and defaults on loans funded with assets tendered by Abra Boost investors.”

Abra Has Magicked Away it Money

The TSSB also alleges that when Abra reassured its customers on June 11 that it wasn’t bankrupt it in fact was “insolvent or…nearly insolvent”, and had been since March 31. As of May this year, the filing says, Abra had around $116.8 million of assets under management in the US, and adds that the platform has been engaged in sending its assets to other exchanges:

The alleged misconduct includes the intentional concealment of financial information reflecting the capitalization of parties, defaults on loans and the transfer of assets to Binance.  

This isn’t the first time that Abra has been in trouble with regulators over securities laws. In July 2020 the Securities and Exchange Commission and Commodity Futures Trading Commission issued Abra with a joint fine of $300,000 for offering unregistered “security-based swaps” to retail investors in addition to “failing to transact those swaps on a registered national exchange.”