Texas regulator says Abra is insolvent

The digital asset management platform Abra engaged in securities fraud and must immediately cease operations. The order from the Texas State Securities Board (USA) contains such a directive.

The regulator accused the company and its CEO Bill Barhydt of misrepresenting the sale of Abra Earn and Abra Boost investment products.

Investors, allegedly, used digital assets to fund accounts tied to the programs in exchange for interest payments. According to enforcement actions, rates reached 10% per year.

“The alleged breach of fiduciary duties includes intentional concealment of financial information, […] failure to meet loan obligations, and secret transfers of assets to Binance,” the regulator said.

According to the agency, as of March 31 the platform was insolvent, but on social media it misled investors by claiming that it was not bankrupt.

In October 2022 Abra announced that it would discontinue selling investments in Abra Earn. According to the regulator, in the same month the platform began offering and selling Abra Boost — a storage service for digital assets for accredited and institutional investors in the United States.

As of May 17, the platform had managed $116.79 million raised from U.S. investors under Abra Earn and Abra Boost.

Barhydt and the company may challenge the regulator’s enforcement actions.

In July 2020 the SEC and CFTC fined Abra $300,000 for offering securities-based swaps to retail investors without proper registration, in addition to “inability to execute this on a registered exchange”.

Abra is one of the veterans of the crypto industry. The firm has been operating since 2014, initially providing a money transfer app between the Philippines and the United States.

In autumn 2015 Abra raised $12 million in funding, including from American Express Ventures.

The company subsequently expanded geographically: in 2016 it entered the U.S. market, and a while later added the option to invest using Bitcoin and other cryptocurrencies in traditional financial instruments.

In May 2020 Abra received $5 million in funding from the Stellar Development Foundation.

In September 2021 the platform closed a Series C funding round of $55 million with the participation of Blockchain Capital, Kingsway Capital, Stellar Development Foundation and others.

In July 2022, Abra laid off ~5% of its staff.