New Jersey regulators have advised investors to remove any remaining crypto assets from their accounts on the crypto lending platform Abra, as the California-based company is discontinuing its operations in the US. This decision follows a multistate investigation into Abra for operating without the necessary state money services business licensing. As part of the agreement between Abra, its CEO William John “Bill” Barhydt, and the regulators, all virtual assets remaining on the platform will be refunded. The settlement also aims to address accusations that Abra unlawfully sold interest-bearing accounts, such as “Abra Boost” and “Abra Earn,” which violated state securities laws. The Division of Consumer Affairs in New Jersey emphasized that the funds raised through the illegal sale of unregistered securities in the state must be returned to New Jersey investors.
In addition to refunding the crypto assets, Abra has agreed to convert crypto held in New Jersey accounts to USD, issue checks for amounts exceeding $10, allow smaller amounts to remain on the platform for withdrawal, and transfer unclaimed funds to the New Jersey Department of the Treasury’s Unclaimed Property Administration. The company is also required to inform New Jersey customers about the withdrawal process for their assets. Despite the majority of Abra’s customers having withdrawn their funds following legal actions by multiple states, approximately $200,000 in cryptocurrency belonging to investors in New Jersey remains on the platform. In June, Abra and its CEO reached a settlement with 25 states to address allegations of operating without proper licenses and agreed to return up to $82.1 million to customers in those states. The states involved in the settlement waived potential penalties to prioritize customer refunds.
The investigation into Abra’s interest-bearing accounts started in June 2023 when multiple states, including New Jersey, took legal action against the company and its CEO. Abra subsequently began winding down its operations in the US as a result of the regulatory scrutiny. Despite the challenges faced by Abra, the company has committed to refunding customers and complying with the settlement terms with the 25 states involved in the legal action. The regulators have been vigilant in ensuring that investor funds are protected and that Abra ceases any illegal activities related to the sale of unregistered securities. The cooperation between state securities regulators has led to a successful resolution in the form of the settlement agreement, which requires Abra to fulfill its obligations to refund customers’ funds and adhere to state regulations in the future.
The agreement reached by Abra, its CEO, and the state securities regulators emphasizes the importance of complying with licensing requirements and securities laws in the crypto industry. By returning the funds raised through the unlawful sale of unregistered securities and refunding customers, Abra aims to restore trust and mitigate any potential legal consequences. The regulators, led by Texas, have played a crucial role in investigating and holding Abra accountable for its actions, ensuring that investor funds are protected and that the company operates within the boundaries of the law. Moving forward, it is essential for companies operating in the crypto sector to adhere to regulatory standards and maintain transparency with customers to avoid similar issues in the future. The settlement agreement serves as a reminder of the regulatory oversight in the crypto space and the consequences of non-compliance with state regulations.
Overall, the settlement between Abra, its CEO, and the state securities regulators demonstrates the importance of regulatory compliance and investor protection in the cryptocurrency sector. By refunding customers and agreeing to resolve allegations of operating without proper licensing, Abra is taking steps to rectify its wrongdoing and ensure that investor funds are returned in a timely manner. The collaborative efforts of the state securities regulators have led to a successful resolution that prioritizes customer refunds and upholds the integrity of the crypto market. As the industry continues to evolve, regulatory oversight will be crucial in maintaining trust and transparency, and companies like Abra must adhere to legal requirements to avoid future penalties and reputational damage. The settlement agreement sets a precedent for accountability and adherence to regulatory standards in the crypto industry, signaling a commitment to protecting investors and upholding the rule of law.
