Texas Securities Board Settles with Abra after Cease and Desist Order

Texas Securities Board Settles with Abra after Cease and Desist Order

UTC by Chimamanda U. Martha · 3 min read
Texas Securities Board Settles with Abra after Cease and Desist Order
Photo: Unsplash

When the Texas State Securities Board issued the cease and desist order in July 2023, the authorities indicated that the move was part of a broader investigation involving multiple securities regulators in the region.

On Monday, January 22, 2024, the Texas State Securities Board announced a settlement agreement with Abra and its CEO Bill Barhydt to reopen the company for investors to withdraw their money following the cease and desist order issued in July.

In an official statement, the Texas securities regulator stated that the settlement addresses the alleged offer and sale of interest-bearing crypto products, namely Abra Earn and Abra Boost.

Genesis of the Settlement

Last year, Texas authorities filed an emergency cease and desist order against Abra and its CEO, prompting the company to cease its business offerings to retail investors in the United States.

Operating through various entities such as Plutus Financial, Inc., Plutus Lending, LLC, and Abra Boost, LLC, the firm faced accusations of securities fraud and deceptive statements related to Abra’s digital asset depository accounts.

The order claimed that Barhydt and his companies offered Abra Earn and Abra Boost to both credited and uncredited customers in the United States without proper authorization.

Investors participating in these programs earned interest by depositing digital assets, including cryptocurrencies, to Abra and authorizing the company to lend the assets to institutional investors on their behalf.

In total, 12,000 investors participated in both programs, with total assets worth approximately $13.6 million, including crypto assets valued at around $1.8 million owned by 1,600 residents in Texas.

Dismissal of All Charges against Abra

When the Texas State Securities Board issued the cease and desist order in July 2023, the authorities indicated that the move was part of a broader investigation involving multiple securities regulators in the region.

However, with the recent settlement with the Texas State Securities Board, regulators will dismiss all cases against Abra filed on or before June 15, 2023. Abra’s CEO Barhydt will have to consent to the entry of the Consent Order by the Securities Commissioner to enable the agency to dismiss all its charges against the firm as part of the settlement deal.

Abra Reopens for Investors to Withdraw Assets

The settlement will also allow Abra to reopen its platform, enabling US investors to withdraw their assets. According to the announcement, investors with more than $10 stuck on the platform are eligible for withdrawal, with a grace period of seven days starting from the settlement date.

Unclaimed assets will be converted into fiat currency and distributed to the remaining investors in Texas.

Joe Rotunda, the director of the enforcement division at the Texas State Securities Board, stated:

“Our agency recognizes that financial losses can have a significant impact on retirement planning, college savings, and even the ability to pay routine bills and expenses. When settling this matter, we prioritized returning money to retail investors. Our division stands ready to assist Texans throughout the process.”

In addition to returning user funds, the settlement requires Abra to offer other state securities regulators the opportunity to participate under the same terms.

Abra has a stipulated timeframe of 30 days to fulfill its obligations.

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