Crypto lending company Abra, which has faced insolvency allegations since March 2023, has reached a settlement in principle with the Texas State Securities Board (TSSB). In a move to address the concerns raised by the TSSB, Abra will be returning assets to its Texan users. The settlement confirmation was released by the TSSB on January 22, marking a significant step towards resolving the ongoing issue.
Winding Down U.S. Retail Operations
As part of the settlement, Abra has begun the process of winding down its U.S. retail operations. Users with balances exceeding $10 will receive notifications, allowing them to withdraw their assets within a seven-day timeframe. Any unclaimed assets will be converted into fiat currency and redirected to the remaining Texas investors.
Entities Involved in the Settlement
Abra operates under the stewardship of crypto entrepreneur Bill Barhydt, and the settlement encompasses four separate entities linked to the Abra brand: Plutus Financial Holdings, Plutus Financial, Plutus Lending, and Abra Boost.
Controversial Investment Products
Abra had been offering its users two programs: Abra Earn and Abra Boost, both of which promised interest on digital asset deposits. The company generated profits by lending these deposited funds. Despite the ongoing settlement, the Abra website still advertises interest rates of up to 10%, compounded daily, with payouts every Monday.
Cease and Desist Order and Allegations
The Texas State Securities Board took action against Abra on June 15, 2023, issuing an emergency cease and desist order. The allegations against Bill Barhydt and Abra included securities fraud and deceptive practices related to the sale of investment products. Additionally, the state regulator asserted that the company was insolvent or nearly insolvent as of March 31, 2023.
Holding of Crypto Assets
According to the settlement terms, at the time of the TSSB's actions, Abra was custodian to $13.6 million worth of cryptocurrencies on behalf of more than 12,000 investors in the United States. Notably, only $1.8 million of these assets were associated with approximately 1,600 Texas residents.
Resolution and Confirmation
Despite the controversy surrounding Abra, Bill Barhydt confirmed the settlement, underlining that Abra had never frozen withdrawals for its U.S. users and had voluntarily ceased its Earn and Boost programs in 2023. With the settlement now in place, Abra takes a significant step towards resolving its financial issues while committing to returning funds to Texan investors.