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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Under the terms of the agreement, Abra is required to allow customers to reclaim their cryptocurrency that was deposited in interest-bearing accounts such as Abra Boost and Abra Earn, according to a notice sent to consumers by the Texas Securities Commissioner. These funds, worth about $13.6 million last year, had been locked up on the firm’s platform last summer, as shown in the notice.

If the agreement is fulfilled, it will end a series of enforcement actions that took place while Abra was nearly—if not entirely—insolvent during a period in which the Earn and Boost investment products were offered, according to the TSB. The TSC alleged that the products were securities and that the registration of both products fell within the agency’s jurisdiction.

Under the agreement, Abra is required to allow withdrawals within 30 days and to fulfill other conditions specified in the agreement, according to the notice. As a result, another exchange in the US has won by starting withdrawals.

Abra customers will receive a notification about withdrawing funds from their accounts and will need to complete the process within a seven-day withdrawal window. Under the terms of the agreement, unclaimed funds will be converted to US dollars and sent to investors in Texas by check.

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The post Another exchange has started withdrawals for its customers! appeared first on Coin Engineer.