Abra Settles SEC Allegations Over Unregistered Securities Sales

Plutus Lending, the company behind the crypto platform Abra, has settled allegations from the SEC regarding unregistered securities sales.

The proceedings began in July 2020. The complaint concerned the Abra Earn yield service, which allowed U.S. clients to earn interest on their cryptocurrencies.

The platform allegedly used clients’ digital assets “to generate income and fund interest payments,” and offered and sold securities that “did not qualify for an exemption from SEC registration.”

According to the regulator, the organization operated as an unregistered investment firm.

“To resolve the dispute with the agency, Abra, without admitting or denying the allegations, agreed to an order. The order prohibits violations of the Securities Act and the Investment Company Act and requires the payment of civil penalties in amounts to be determined by the court,” the statement said.

Abra Earn attracted approximately $600 million in crypto assets, including $500 million from American clients. It “failed to comply with registration regulations designed to provide investors with sufficient and accurate information to make informed decisions before investing,” the regulator noted.

“To exacerbate the potential harm to investors, Abra allegedly sold its own securities in violation of applicable provisions of the Investment Company Act, which provide a range of important protections for investors, including minimizing conflicts of interest,” the document claims.

In an interview with The Block, a platform representative stated that no consumer was harmed as a result of the settlement or the cessation of Abra Earn. All US Earn client assets, including accrued interest, were transferred to their Abra Trade accounts in 2023. The company operates in the U.S. through Abra Capital Management, a registered investment advisor.

Earlier in January, the Texas State Securities Board announced a settlement in principle with Abra to resolve allegations of misleading investors in the sale of Abra Earn and Abra Boost products.