Million-Dollar Crypto Scandal: Abra Pays Up in SEC Settlement

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The SEC settles with crypto lender Plutus Lending LLC, operating as Abra

The Securities and Exchange Commission (SEC) has come to an agreement with cryptocurrency lender Plutus Lending LLC, which is known as Abra. This agreement resolves claims that Abra broke federal securities laws by not registering its retail crypto lending product, Abra Earn, and by functioning as an unregistered investment company.

Under the terms of the settlement, Abra agreed to settle a fine of $1.65 million in a civil case and adhere to a perpetual court order issued by the SEC.

Despite Abra not acknowledging or disputing the claims, the Securities and Exchange Commission highlighted that this enforcement action reinforces their dedication to safeguarding investors within the unpredictable crypto market.

Abra Earn

The allegations against Abra by the SEC stem from their offering of Abra Earn, a service that enabled American investors to lend cryptocurrency for interest returns. However, according to the SEC, Abra advertised this program as a safe investment, and at its highest point, it managed more than $600 million in assets, with almost half a billion dollars coming from U.S. investors.

As an analyst, I’ve discovered that our company holds over 40% of its assets in investment securities, a practice that appears to contravene the Investment Company Act. This observation calls for a closer examination and potential adjustments to ensure compliance with regulatory requirements.

The SEC’s settlement with Abra comes amid heightened scrutiny of crypto lending platforms.

By August 2024, it was mandated by the New Jersey Attorney General that Abra should repay the remaining cryptocurrency holdings to its investors and provide refunds. This action was taken during a joint probe conducted across multiple states.

This situation shares similarities with other Securities and Exchange Commission (SEC) actions, such as the February 2024 settlement they reached with Genesis Global Capital concerning their Gemini Earn program. The SEC is consistently focusing on companies that don’t adhere to registration and disclosure standards, underscoring the dangers associated with unregistered securities in the cryptocurrency market.

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2025-01-16 18:56