Regulation
Abra fined $82 million for offering unlicensed cryptocurrencies
In a significant regulatory development, crypto investment platform Abra and its founder and CEO William Barhydt have reached an agreement with 25 state financial regulators regarding operating their mobile app without required licenses.
This information was confirmed by the Conference of State Bank Supervisors (CSBS) in a recent statement.
Key terms of the agreement
The resolution, which involves several states including Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, Vermont and Washington, will see Abra return approximately $82.1 million in cryptocurrency to its customers in the United States.
Additionally, the settlement states that Abra will stop accepting crypto allocations from Abra Trade’s US clients. The Company will also cease all activities related to the manufacture, purchase, sale or trading of cryptocurrencies for Abra Trade customers in these states.
William Barhydt, in addition to the company’s commitments, agreed to a significant personal limitation of his professional activities. For the next five years, it will not engage in any activity related to money transfer or money services in any of the States of operation, except as a passive investment.
Statement released by the Conference of State Bank Supervisors
Charlie Clark, CSBS President and Director of the Washington State Department of Financial Institutions, stressed the serious role of state financial regulators in protecting consumers and combating unauthorized transactions.
Clark stressed that companies that fail to comply with state laws will be held liable. The states involved in the settlement have decided to forgo a potential penalty of $250,000 per jurisdiction, choosing instead to use the funds to reimburse affected customers.
This decision is part of a broader strategy to secure repairs are carried out without unduly burdening the company, thus allowing reimbursement to the customer.
Ongoing legal challenges for Abra
This settlement is only part of Abra’s ongoing legal challenges. The company also reached an agreement with several state securities regulators, including those in New Mexico and Texas, regarding the sale of unregistered securities.
An Abra spokesperson said the consent orders resulting from these negotiations would resolve all state-related issues regarding the Abra app for the period between March 2021 and June 2023.
Remarkably, since June of last year, more than $250 million, or 99% of the assets held by US retail customers using the Abra app, have been returned.
Additionally, despite these setbacks, Abra continues to maintain a presence in the U.S. financial market through Abra Capital Management, an investment adviser registered with the Securities and Exchange Commission (SEC).
This branch allows customers to continue investing in cryptocurrencies, as well as earn yield, stake and borrow against their cryptocurrency holdings.
In an effort to reassure stakeholders and customers, CEO Bill Barhydt affirmed on social media that Abra’s services, Abra Private and Abra Prime, remain fully operational in the United States and internationally.
Barhydt hinted at major upcoming announcements related to these services and encouraged those interested in cryptocurrency investments to consider Abra’s offerings. The CSBS said the investigation into Abra was initially prompted by information from state securities regulators last summer.
This collaborative effort between state financial and securities regulators underscores growing oversight and a coordinated approach to regulating the booming cryptocurrency market.