Key Takeaways
- The Texas State Securities Board has accused Abra of misleading the public and of committing securities fraud
- The regulator further accused Abra of intentionally concealing financial information, including defaults on loans and the capitalization of parties.
Crypto lender Abra is facing allegations of insolvency and securities fraud, according to state securities regulators.
In an emergency cease-and-desist order issued by the Texas State Securities Board on June 15, the board accused Abra, also known as Plutus Financial, its founder William Barhydt, Abra Boost, and Plutus Lending of misleading the public and committing securities fraud. The regulator also claimed that the company has been insolvent since at least March 31, 2023.
The Texas State Securities Board alleged that Abra made misleading statements in investment offerings such as Abra Earn and Abra Boost, deceiving the public. Despite Abra’s announcement in October 2022 that it would cease selling investments in Abra Earn, the regulators claim that the company continued to offer and sell investments in Abra Boost to accredited and institutional investors in the United States.
According to the regulators, Abra Trade and Plutus Lending secretly transferred assets worth $118,581,732 to Binance Holdings Limited. This transfer of assets raises concerns since the U.S. Securities and Exchange Commission recently filed a lawsuit against Binance. The Texas State Securities Board accused Abra of intentionally concealing financial information, including defaults on loans and the capitalization of parties.
The Texas State Securities Board plans to hold a hearing on the matter, although a schedule has not yet been determined. In the meantime, customers are still allowed to withdraw funds from Abra and its entities.
It has been discovered that Abra holds significant amounts of money with Babel Finance, Genesis, Three Arrows Capital, and Auros Tech Limited. However, these companies are currently undergoing liquidation or bankruptcy processes, casting doubt on the recovery of these funds.
During an interview with regulators on March 31, 2023, Abra founder William Barhydt did not contest their conclusion that the company was insolvent, further supporting the allegations made against Abra and its involvement in deceptive practices. Reportedly, following the collapse of FTX last year, Abra faced a cash crunch forcing the firm to lay off employees to cut costs.
