Abra was charged by the SEC with issuing securities without registration for at least two years and illegally raising more than $600 million

The U.S. Securities and Exchange Commission (SEC) has charged cryptocurrency investment firm Abra, also known as Plutus Lending LLC, with offering and selling unregistered crypto asset securities. The firm is also accused of functioning as an unregistered investment company.

Abra has settled the charges concerning its Abra Earn service, agreeing to pay a fine and comply with securities laws without admitting any wrongdoing. According to an Abra spokesperson, the Earn service, which was shut down in 2022, caused no harm to consumers.

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Abra Earn and SEC Allegations

Launched in July 2020, Abra Earn allowed U.S. investors to deposit crypto assets for variable interest returns. At its peak, the service held approximately $600 million in assets, with nearly $500 million coming from U.S. investors.

The SEC alleges that Abra sold securities to U.S. investors without registering, violating laws meant to protect investors. Abra reportedly used deposited assets to generate income for itself while funding interest payments, which the SEC argues constituted unregistered securities offerings.

The SEC also contends that Abra operated as an unregistered investment company for over two years, holding significant assets in investment securities.

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Broader Regulatory Context

The SEC's action against Abra is part of a larger crackdown on the cryptocurrency industry. Earlier this year, Abra reached a settlement with regulators from 25 U.S. states over unlicensed operations, agreeing to refund up to $82.1 million to customers. CEO Bill Barhydt also faces restrictions on participating in money services businesses for five years.

This latest action continues the SEC’s aggressive enforcement, which has recently included lawsuits against major exchanges like Binance and Coinbase. The SEC's stance on regulating crypto firms emphasizes the need for compliance with registration laws, reflecting its ongoing scrutiny of the industry.

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Conclusion

Abra’s settlement and the SEC's continued legal actions highlight the regulator's focus on ensuring that crypto firms adhere to existing securities laws, underscoring the ongoing tension between innovation and regulation in the crypto space.