Abra, a cryptocurrency firm, and its CEO Bill Barhydt have reached a settlement with 25 US state regulators for operating crypto trading services without the necessary licenses. The settlement involves the regulators agreeing to forgo monetary penalties of $250,000 per jurisdiction in exchange for $82 million in customer repayments. As part of the agreement, Abra has ceased accepting crypto allocations from US customers and will refund their balances by June 15, 2023. Additionally, Barhydt is prohibited from participating in money services businesses that require licensing in the participating states, although he can remain a passive investor for five years.
Washington was the first state to release its consent order, revealing that 706 users in the state still hold a combined balance of $116,000.78 on the Abra platform. The state noted that customers have already received $13.6 million in repayments. In addition to Washington, Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, and Vermont were instrumental in the settlement process. Eighteen other states were also involved, with each expected to issue their consent orders in the following weeks or months.
Abra began winding down its operations in the US in June 2023, discontinuing services for US customers while maintaining operations outside of the country. The firm clarified that its institutional service, Abra Capital Management, is still operational in the US and registered with the SEC. The decision to wind down US operations came after state securities regulators informed money services business regulators of Abra’s activities, leading to settlements with various states.
The Texas State Securities Board issued an emergency cease and desist order against Abra related to its interest-bearing products, ultimately resulting in a settlement in January. Similarly, New Mexico’s securities regulator settled with Abra in April. The company’s settlement with the 25 US state regulators signifies a significant step in resolving its regulatory challenges and ensuring compliance with state licensing requirements.
Abra’s settlement with US state regulators marks a pivotal moment in the firm’s regulatory journey. By agreeing to repay customers, cease US operations, and comply with licensing regulations, Abra is taking steps towards rectifying its past compliance issues and forging a path towards regulatory compliance in the future.