As a seasoned crypto investor with a decade of experience under my belt, I’ve seen the good, the bad, and the ugly. The recent settlement between Abra and the SEC is a stark reminder that not every platform can be trusted blindly. It’s disheartening to see a company like Abra, which had shown promising potential, mislead investors for years by selling unregistered securities.
Abra, a digital currency platform, has agreed to resolve charges with the U.S. Securities and Exchange Commission (SEC). The SEC claims that Abra offered its Earn product, which was classified as a security, to consumers without first registering it properly.
Abra Misled American Citizens
Four years back, Abra initiated promoting its Earn product to clients, encouraging them to deposit their assets for yield-generating rewards. However, the regulatory body deemed this approach as deceptive. As a result, the company gradually phased out the Abra Earn program and advised its American customers to withdraw their cryptocurrency assets from the platform by June 2023.
Based on a filing by the SEC, it appears that the Abra Earn program had a potential value of up to $600 million. A substantial portion of this fund, approximately $500 million, was sourced from investors within the United States. Additionally, for a significant period of its operations, Abra functioned as an unregistered investment company.
The company neither admitted nor refuted the charges brought by the SEC. Instead, it agreed to abide by the restriction against breaching U.S. securities registration regulations and will accept whatever penalties the court deems fitting. It’s worth noting that this isn’t the first time Abra has reached such settlements with regulators in different countries.
Over a span of four years, the company has resolved disputes with approximately 25 states for functioning without necessary permits. In June of this year, it consented to refund as much as $82 million to customers in the U.S. This action was taken following investigations that uncovered Abra’s unlicensed operations in states such as Washington, Texas, Georgia, and Ohio. Officials in these areas decided to focus on reimbursing customers rather than imposing penalties instead.
It’s worth noting that this latest resolution marks the second time the company has reached an agreement with the SEC. Back in 2020, Abra entered into a settlement, agreeing to pay $150,000 to both the SEC and the Commodity Futures Trading Commission (CFTC), following an investigation into their swaps product.
As a researcher, I’d rephrase it as follows: “I found myself in the position where I had to highlight an instance. Abra, a company, sold approximately $400 million worth of securities to American investors without adhering to registration laws aimed at providing investors with adequate and accurate information before they invest.”
She noted that the agency is governed by “economic realities, not cosmetic labels”.
New Jersey AG Advises Citizens to Opt-Out of Abra
A few weeks ago, Matthew J. Platkin, New Jersey’s Division of Consumer Affairs Attorney General, urged individuals who have invested in a crypto trading and lending company to quickly withdraw their funds. This advice is linked to an ongoing multi-state investigation concerning the sale of unregistered securities.
In a similar manner, Abra has consented to reimburse all virtual assets belonging to New Jersey’s investors who used their platform. This agreement resolves allegations that Abra had illegally sold interest-generating crypto accounts called “Abra Boost” and “Abra Earn” to investors, with approximately $2.97 million being the total earnings taken from New Jersey residents.
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2024-08-27 12:09