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Operating as Abra, the United States Securities and Exchange Commission settled charges in July 2020 against Plutus Loan LLC for providing and marketing unregistered crypto asset securities within its crypto loan product. An official notice by the regulator said that the agency also claimed the financial services and IT company ran as an unregistered investment company.
The main focus of the SEC lawsuit was Abra Earn, a yield-earning service offered by the company that allowed American consumers to earn interest on their cryptocurrencies. Abra allegedly offered and sold securities that “did not qualify for an exemption from SEC registration” as well as used consumer digital assets “to generate income for itself and to fund interest payments.”
The agency said, “Abra, without admitting or denying the SEC’s allegations, has consented to an injunction prohibiting it from violating the registration provisions of the Securities Act and the Investment Company Act and requiring it to pay civil penalties in amounts to be determined by the court.”
The SEC notes that Abra Earn raked in around $600 million in crypto assets—$500 million of which originated from American clients.
“As alleged, Abra sold nearly half a billion dollars of securities to U.S. investors without complying with registration laws designed to ensure that investors have sufficient, accurate information to make informed decisions before they invest,” said Associate Director of the SEC’s Division of Enforcement, Stacy Bogert, in a statement. “To compound the potential harm to investors, Abra apparently sold its own securities while skirting applicable Investment Company Act provisions that provide a number of important protections to investors, including minimizing conflicts of interest.”
An Abra spokesman responded with a statement saying: “Plutus Lending LLC (“PLL”), a subsidiary of Abra, has agreed to settle an action brought by the SEC regarding Abra Earn, a service that was discontinued in 2022. Without admission of wrongdoing, PLL agrees to continue to comply with securities laws. No consumers were harmed at all by the settlement or wind down of Abra Earn. All assets for US Earn customers including accrued interest were transferred to their Abra Trade accounts in 2023. Abra continues to operate in the USA via Abra Capital Management, an SEC-registered investment advisor.”
Regarding Abra Earn, the Texas State Securities Board also issued an enforcement action against Abra and its CEO in June 2023 on claims of securities fraud.
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