Recently, the crypto trading platform Abra and its CEO, William “Bill” Barhydt, reached a settlement with 25 US state regulators. The regulators accused Abra of offering crypto trading services without proper licenses, resulting in a violation of state regulations. This settlement marks a significant development in the crypto space, highlighting the increasing scrutiny and regulation faced by companies operating in this industry.
As part of the settlement, the 25 state regulators agreed to forgo monetary penalties and instead facilitate $82 million in customer repayments. Abra also agreed to cease accepting crypto allocations from US customers and refund their balances. Additionally, Barhydt has been barred from participating in money services businesses that require licensing in the states involved in the settlement. However, he may still operate as a passive investor for the next five years, despite being Abra’s largest equity owner.
Washington was the first state to publish its consent order related to the settlement. The order revealed that 706 users in the state had a remaining balance of over $116,000 on the Abra platform. While Washington customers have received $13.6 million to date, other states, including Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, and Vermont, played a crucial role in the settlement process. A total of 18 states participated in the settlement, with others expected to issue their consent orders in the coming weeks or months.
Following the settlement, Abra announced the winding down of its US operations in June 2023. The company stated that they would no longer accept US app users and would discontinue various consumer services in the country. However, Abra’s operations outside the US remain unaffected. It’s worth noting that the firm’s institutional service, Abra Capital Management, is still operating in the US and is registered with the SEC. The decision to wind down US operations came after state securities regulators raised concerns about Abra’s activities, leading to a series of settlements and regulatory actions.
The Texas State Securities Board issued an emergency cease and desist order against Abra in mid-2023 concerning its interest-bearing products, ultimately resulting in a settlement in January. Similarly, New Mexico’s securities regulator also settled with Abra in April. These regulatory challenges highlight the complex and evolving regulatory landscape faced by companies operating in the crypto trading space. As the industry continues to grow, companies must adhere to stringent regulations to avoid facing legal actions and reputational damage.
The settlement between Abra and US state regulators underscores the importance of regulatory compliance in the crypto trading sector. Companies operating in this industry must navigate a complex regulatory landscape and ensure they have the necessary licenses and approvals to conduct their business legally. The case of Abra serves as a cautionary tale for other crypto trading platforms, highlighting the potential consequences of non-compliance with state regulations.
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