Abra Fined $82 Million for Offering Crypto Without a License

In a significant regulatory development, the crypto investment platform Abra and its founder and CEO, William Barhydt, have reached a settlement with 25 state financial regulators concerning the operation of their mobile application without the requisite licenses.

This information was confirmed by the Conference of State Bank Supervisors (CSBS) in a recent announcement.

Key Terms of the Settlement

The resolution, which involves multiple states including Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, Vermont, and Washington, will see Abra returning approximately $82.1 million in cryptocurrency to its customers in the U.S.

Furthermore, the settlement stipulates that Abra will cease accepting crypto allocations from U.S. customers of Abra Trade. The company will also discontinue all activities related to the making, buying, selling, or trading of cryptocurrencies for Abra Trade customers in these states.

William Barhydt, in addition to the company’s commitments, has consented to a significant personal limitation on his professional activities. For the next five years, he will not engage in any business related to money transmitting or money services in any of the settling states, except in a passive investment capacity.

Charlie Clark, CSBS Chair and Director of the Washington State Department of Financial Institutions, emphasized the serious nature of the state financial regulators’ roles in protecting consumers and curbing unlicensed operations.

Clark pointed out that companies failing to comply with state laws would face accountability. The states involved in this settlement decided to waive a potential $250,000 penalty per jurisdiction, choosing instead to channel these funds toward the repayment to affected customers.

This decision forms part of a broader strategy to ensure reparations are made without unduly burdening the company, thereby allowing for customer restitution.

Ongoing Legal Challenges for Abra

This settlement forms only one part of Abra’s ongoing legal challenges. The company has also settled with several state securities regulators, including those in New Mexico and Texas, over the sale of unregistered securities.

A spokesperson from Abra stated that the consent orders emerging from these negotiations would resolve all state-related issues concerning the Abra App for the period between March 2021 and June 2023.

Remarkably, since June of the previous year, over $250 million, accounting for 99% of assets held by U.S. retail customers using the Abra App, has been returned

Additionally, despite these setbacks, Abra continues to maintain a presence in the U.S. financial market through Abra Capital Management, a Securities and Exchange Commission (SEC)-registered investment advisor.

This branch allows clients to continue investing in cryptocurrencies, as well as to earn yield, stake, and borrow against their crypto holdings.

In an effort to reassure stakeholders and customers, CEO Bill Barhydt took to social media to affirm that Abra’s services, Abra Private and Abra Prime, remain fully operational both in the USA and internationally.

Barhydt hinted at upcoming significant announcements related to these services and encouraged those interested in crypto investments to consider Abra’s offerings. The CSBS detailed that the investigation into Abra was initially triggered by tips from state securities regulators last summer.

This collaborative effort between state financial and securities regulators underscores a growing scrutiny and coordinated approach towards regulating the burgeoning cryptocurrency market.