SEC accuses Abra of conducting unregistered cryptocurrency offers and sales

The U.S. Securities and Exchange Commission announced on August 26 that it has settled charges against Plutus Lending LLC, known as Abra.

He charges The lawsuit relates to Abra’s failure to register its retail cryptocurrency lending product, Abra Earn, and for operating as an unregistered investment firm. According to the SEC’s complaint, Abra began offering Abra Earn in July 2020, allowing U.S. investors to lend their crypto assets in exchange for interest payments.

At its peak, Abra Earn had roughly $600 million in assets under management, nearly $500 million of which came from U.S. investors, according to the SEC filing.

On August 12, New Jersey’s attorney general recommended that state investors withdraw funds from Abra, as it had shut down its U.S. operations following a multi-state investigation into the sale of unregistered securities. Under an agreement with New Jersey regulators, Abra was required to return all remaining crypto assets to investors, convert them to U.S. dollars, and issue refund checks for amounts exceeding $10.

This settlement follows similar actions in Texas, where Abra was accused of concealing critical financial information.

Details of Abra's charges

The SEC alleges that Abra Earn marketed itself as a safe investment without complying with the necessary registration requirements. In addition, Abra held more than 40% of its assets in investment securities, which violates the Investment Company Act.

Although Abra began winding down the program in June 2023, the SEC charges highlight the company’s failure to comply with regulations designed to protect investors.

Abra has agreed to settle the charges by consenting to an injunction and possible civil penalties, the amounts of which will be determined by the court.

This news echoes the SEC’s recent legal battles with Gemini Earn. In February, Genesis Global Capital, LLC agreed to pay a $21 million fine to settle SEC charges for the unregistered offer and sale of securities through its cryptocurrency lending program, Gemini Earn.

Following Genesis’ bankruptcy filing in January 2023, investors were unable to withdraw their assets, and the SEC’s enforcement underscores the risks of non-compliance with federal securities laws in the volatile cryptocurrency market.