Crypto lending firm Abra, which once handled more than $116 million in assets, had allegedly committed securities fraud and has been insolvent since March 31, according to Texas regulators.
In a June 15 enforcement action — including an emergency cease and desist order — the Texas State Securities Board accused Abra and its founder William Barhydt of committing securities fraud as well as engaging in deception regarding the sale of investment products through its affiliates Abra Earn and Abra Boost.
"The alleged misconduct includes the intentional concealment of financial information reflecting the capitalization of parties, defaults on loans, and the transfer of assets to Binance," the regulator said.
Abra was founded in 2014 by Barhydt, and allowed both retail and institutional investors to engage in the trading, lending and borrowing of crypto assets.
As of May 17, Abra collectively held approximately $116.79 million of assets under management for Abra Earn and Abra Boost investors in the United States.
The regulator alleged that Barhydt and Abra “made offers of investments in Abra Earn in Texas containing statements that were materially misleading or otherwise likely to deceive the public.”
Abra has no direct exposure to SIlicon Valley Bank or Silvergate Bank.— Abra (@AbraGlobal) March 11, 2023
All services at Abra are fully operational.
AbraUSD held in Abra Trade is totally safe and can be converted to any other crypto asset supported by Abra Trade including Tether, Ethereum and Bitcoin. /1
According to regulators, Abra announced that it would “cease selling investment in Abra Earn in October 2022.” The firm allegedly did no such thing. In October, Abra and its affiliates “began offering and selling investments in Abra Boost, a digital asset depository account, to accredited and institutional investors in the United States.”
The state regulator has also accused the firm of being insolvent, or nearly insolvent, as of March 31.
This is despite an unnamed affiliate claiming on social media as recently as June 11 that “Abra is not bankrupt.”
Cointelegraph contacted Abra and Barhydt for comment but did not receive an immediate response.
On Sep. 12, 2022, Abra announced plans to become the first United States-based bank that would allow clients to deposit digital assets. The venture was expected to launch at the beginning of 2023.
We have some BIG news. Today we’re announcing the formation of Abra Bank and the launch of Abra Boost, Abra’s new staking and yield offering.— Bill Barhydt (@billbarhydt) September 12, 2022
Lots to unpack… /https://t.co/eQMFS5mKmT
However, following the collapse of FTX in November last year, Abra began laying off employees and “restructuring” to minimize overheads.
On July 13, 2020, the Securities and Exchange Commission and Commodity Futures Trading Commission issued Abra with a joint fine of $300,000 for offering “security-based swaps” to retail investors without the proper registration in addition to “failing to transact those swaps on a registered national exchange.”