Breaking: US SEC Cracks Down On Abra For Unregistered Crypto Offerings
The US SEC has charged the crypto firm Abra in the latest crackdown for offering unregistered digital assets services to its clients. In a recent press release, the US Securities and Exchange Commission said that the regulators have charged Plutus Lending LLC, which operates under the name Abra, for offering crypto solutions without registering with the agency.
So, let’s explore the report and the charges against the crypto firm in detail.
US SEC Charges Abra For Crypto Violations
The complaint from the agency, as highlighted in the US SEC press release, centers on the crypto firm’s lending product “Abra Earn”. The lending product allowed US investors to lend their crypto assets to the firm in exchange for interest payments.
According to the agency, the crypto firm started offering this service in July 2020 without registering with the regulatory body. At its peak, the lending product managed assets worth $600 million, of which around $500 million came only from the US traders.
Meanwhile, the agency claimed that the firm marketed the program as a way for traders to “auto-magically” earn interest. On the other hand, the firm has used the investors’ crypto assets for its own profit, the report added.
In addition, the agency further alleges that the crypto firm sold securities without qualifying for an exemption from SEC registration. Besides, the charges also include operating as an unregistered investment firm for over two years. During this time, the crypto firm issued securities and helped over 40% of its total assets in investment securities, which include loans of crypto assets to institutional borrowers, the report added.
Abra Agrees To Settle SEC Charges
The latest enforcement action showcases the commitment of the US SEC to regulate the crypto market and provide “protection to investors” from risky offerings. Stacy Boger, Associate Director of the SEC’s Division of Enforcement, highlights the importance of compliance with registration laws.
He noted that these laws are designed to ensure transparency for the market participants while making investment decisions. In addition, Bogert noted that Abra’s actions failed to comply with important provisions of the Investment Company Act. This company act aims to minimize conflicts of interest and protect investors.
Meanwhile, the charges, filed in the US District Court for the District of Columbia, charge the crypto firm for violating key provisions of the Securities Act of 1933 and the Investment Company Act of 1940. As part of a settlement, Abra nodded for an injunction that prohibits the firm from future violations.
Additionally, the crypto firm also agreed to pay civil penalties, but the amount is not yet decided and will be determined by the court. It’s worth noting that Abra has previously settled with 25 US state financial regulators for operating without licenses.
Earlier this year in June, the firm agreed to return approximately $82 million in digital assets to customers as part of the settlement. This earlier action was taken against Abra, its subsidiaries, and CEO William Barhydt, highlighting the company’s history of regulatory issues.
The post Breaking: US SEC Cracks Down On Abra For Unregistered Crypto Offerings appeared first on CoinGape.
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