Abra and its CEO, William “Bill” Barhydt, have recently come to a settlement with 25 US state regulators for operating without the necessary licenses to offer crypto trading services. The settlement includes a waiver of monetary penalties, with a focus on customer repayments totaling $82 million. Additionally, Abra has agreed to cease accepting crypto allocations from US customers by June 15, 2023, and refund any remaining balances. Barhydt has been restricted from engaging in licensed money services businesses in the participating states, although he can maintain a passive investor role for the next five years.
State Involvement
Washington was the first state to release its consent order, revealing that 706 users in the state still have a combined balance of $116,000.78 on Abra’s platform. Despite this, Washington acknowledged that $13.6 million has already been returned to customers. The Conference of State Bank Supervisors (CSBS) highlighted the contributions of Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, and Vermont to the settlement, with 18 other states, including Washington, also participating. The remaining states are expected to issue their consent orders in the near future, potentially leading to additional states joining the settlement.
Abra’s Response
In response to the settlement, Abra began winding down its US operations in June 2023, announcing the discontinuation of US app usage and various consumer services. However, the company emphasized that its operations outside the US would continue unaffected. Despite this decision, Abra Capital Management, the firm’s institutional service, remains active in the US and is registered with the Securities and Exchange Commission (SEC). The company’s US wind-down coincided with state securities regulators notifying money services business (MSB) regulators about Abra’s activities, prompting a concurrent pursuit of settlements. Specifically, the Texas State Securities Board issued an emergency cease and desist order against Abra for its interest-bearing products, resulting in a settlement in January. New Mexico’s securities regulator also reached a settlement with Abra in April.
Overall, the settlement between Abra and US state regulators marks a significant development in the regulation of crypto trading services. By agreeing to a series of measures to rectify their unauthorized operations, Abra has signaled a willingness to comply with legal requirements and prioritize customer protection. As more states finalize their consent orders and potentially join the settlement, the repercussions of this agreement are likely to have lasting effects on the crypto industry and the relationship between digital asset platforms and regulatory authorities.
Leave a Reply