Abra and CEO William “Bill” Barhydt have reached a settlement with 25 US state regulators for offering crypto trading services without securing appropriate licenses. This settlement, announced by the Conference of State Bank Supervisors (CSBS) on June 26, involves the regulators forgoing monetary penalties of $250,000 per jurisdiction in exchange for Abra facilitating $82 million in customer repayments.
As part of the settlement, Abra has agreed to stop accepting crypto allocations from US customers as of June 15, 2023, and refund US customer balances. Additionally, CEO William Barhydt is barred from participating in money services businesses that are licensed or required to obtain licensing in the states involved in the settlement; although, he may remain involved as a passive investor for five years. Barhydt is the largest equity owner of Abra.
Washington became the first state to publish its consent order on June 26, revealing that 706 users in the state still have a balance of $116,000.78 remaining on the platform. Washington also noted that customers have received $13.6 million in repayments to date. The CSBS highlighted the involvement of Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, and Vermont in the settlement and listed 18 other states, including Washington, that participated in the agreement. The remaining states are expected to issue their consent orders in the following weeks or months.
Abra has begun to wind down its US operations, deciding to stop accepting US app users and discontinue various US consumer services starting in June 2023. However, the company stated that its operations outside the US remain unaffected. Reports indicate that Abra Capital Management, the firm’s institutional service, continues to operate in the US and is registered with the SEC. This decision to wind down its US operations comes after state securities regulators informed money services business (MSB) regulators about Abra’s activities, leading to a push for settlements with state authorities.
Prior to the settlement with the 25 state regulators, Abra faced legal action from the Texas State Securities Board, which filed an emergency cease and desist order against the company regarding its interest-bearing products in mid-2023. This action culminated in a settlement in January. Additionally, New Mexico’s securities regulator also settled with Abra in April before the broader agreement with multiple states was reached.
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