SEC Charges Abra for Unregistered Crypto Asset Sales via Abra Earn

The United States Securities and Exchange Commission (SEC) has charged Plutus Lending LLC, a financial services and technology company operating under the name Abra, with offering and selling unregistered crypto asset securities through its crypto lending product.

According to an official release by the regulator, the SEC also accused Abra of functioning as an unregistered investment company.

SEC Alleges Abra Sold Unregistered Securities

The core of the SEC’s complaint centers on Abra’s yield-earning service, Abra Earn, which allows U.S. users to earn interest on their cryptocurrency holdings. The regulator claims that Abra used customers’ digital assets to generate income for itself, fund interest payments, and offer and sell securities without complying with SEC registration requirements. The SEC alleges that Abra Earn accumulated nearly $600 million in crypto assets, with $500 million coming from U.S. customers.

Stacy Bogert, Associate Director of the SEC’s Division of Enforcement, stated that Abra allegedly sold nearly half a billion dollars worth of securities to U.S. investors without adhering to registration laws designed to ensure that investors have sufficient and accurate information to make informed decisions. She further noted that Abra allegedly bypassed provisions of the Investment Company Act, which are meant to protect investors by minimizing conflicts of interest.

Texas Charges Abra with Fraud and Concealment

The SEC action follows similar enforcement measures from the Texas State Securities Board, which in June 2023 charged Abra and its CEO with securities fraud over some of its flagship products. The state regulator accused Abra of engaging in deceptive practices related to the sale of investments in both Abra Earn and Abra Boost, targeting accredited and unaccredited investors.

The allegations extended to the intentional concealment of financial information, including issues related to capitalization, loan defaults, and asset transfers to Binance. The state regulator further asserted that the firm was insolvent or nearly insolvent as of March 31.