Abra Crypto Wallet fined $300,000 by the SEC and CFTC for offering unregistered Stock Swaps.

The US SEC and CFTC have charged Abra crypto wallet with facilitating unregistered stock swaps on their crypto wallet app.

The US Securities Exchange Commission and the Commodity Futures Trading Commission have charged Abra Crypto Wallet with offering unregistered investment contracts and violating securities regulations. The crypto wallet and its partner company will jointly pay $300,000 in penalties to the SEC and CFTC. However, Abra will continue to operate as a standard cryptocurrency wallet. Unlike other crypto wallets, Abra enabled users to invest their crypto in stocks and ETFs, which was a violation, according to the SEC and the CFTC. 

 

Abra violated provisions around “unregistered offers and sales of security-based swaps.”

The US SEC explained that the Abra wallet’s users were able to “bet on price movements of the US-listed equity securities” or enter into contracts that mirrored those securities’ performance. According to the securities exchange, the crypto wallet violated securities law by failing to use a registered securities exchange. It violated provisions around “unregistered offers and sales of security-based swaps.” The CFTC has filed parallel charges against the company. The crypto wallet first began to offer securities swaps in February 2019. At that time, Abra did not ensure that users were eligible to buy securities, and the SEC shut down the feature by the end of that month. 

 

Abra crypto wallet re-launched the feature in May 2019.

The California-based Abra crypto wallet re-launched the feature in May 2019 and offered it to users outside of the United States. Plutus Technologies, Abra’s Philippines-based partner company, was responsible for the feature. Despite the wallet’s decision to move the feature outside the USA, the SEC says that Abra continued to administer security swaps. However, The company’s US-based employees continued to market swaps and screen the users who bought contracts. Some employees even bought securities themselves. Abra and Plutus will now pay a joint fine of $300,000 and will discontinue the securities swap feature on the Abra app.

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Jai Pratap
Jai Pratap
A Mass Media Graduate who loves to write. Jai is also a sports enthusiast and a big movie buff. He loves to learn new things.

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