Crypto lending firm Abra, which handled more than $116 million in assets for alleged securities fraud, has been insolvent since March 31, according to Texas regulators.
In a June 15 enforcement action including an emergency cease and desist order -- the Texas Securities Commission charged Abra and its founder, William Barhydt, with securities fraud and, through its affiliates, Abra Earn and Abra Investment Products Sales are deceptively promoted.
“The alleged misconduct included willful concealment of financial information reflecting the capitalization of the parties, loan defaults, and transfers of assets to Binance,” the watchdog said. Founded by Barhydt in 2014, Abra allows retail and institutional investors to trade de, borrow and borrow crypto assets.
As of May 17, Abra managed approximately $116.79 million in total assets for Abra Earn and Abra Boost investors in the United States.
Barhydt and Abra "made an investment offer for Abra Earn, Texas, that contained statements that were materially misleading or likely to deceive the public," the regulator said. According to the regulator, Abra announced it would "cease the sale of its investment in Abra Earn in October 2022". The company allegedly does no such thing. In October, Abra and its affiliates “began to offer and sell investments in the digital asset deposit account Abra Boost to accredited and institutional investors in the United States.”
State regulators also accused the company of being insolvent or nearly insolvent as of March 31. Although as recently as June 11, an unnamed affiliate claimed on social media that "Abra is not broke." On September 12, 2022, Abra announced ed plans to become the first US bank to allow customers to deposit digital assets. The joint venture is expected to launch in early 2023. However, following the collapse of FTX last November, Abra began laying off staff and “restructuring” to minimize overhead.
On July 13, 2020, the SEC and CFTC imposed a joint fine of $300,000 on Abra for, among other things, “failure to register on a national exchange.”
