Abra, a cryptocurrency platform, along with its affiliated entities and CEO William Barhydt, has reached a settlement with 25 U.S. states for operating without the required licenses. This settlement follows an investigation led by a consortium of regulators from eight states.
Financial regulators from Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, Vermont, and Washington found that Abra had been operating an unlicensed mobile application for buying, selling, and trading cryptocurrencies.
The Conference of State Bank Supervisors (CSBS) reported that Washington played a pivotal role in negotiating the settlement. Under the terms of the agreement, each state will forego penalties amounting to $250,000, which will instead fund customer reimbursements. A total of up to $82.1 million, along with all remaining virtual assets, will be returned to Abra customers in the settling states.
As part of the settlement, William Barhydt, who holds a significant equity stake in Abra, agreed to refrain from engaging in any licensed money transmission or money services business activities in these states for the next five years, except as an investor.
Currently, the states involved in the settlement include Alaska, Alabama, Arizona, Arkansas, Connecticut, the District of Columbia, Georgia, Idaho, Iowa, Maine, Minnesota, Mississippi, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Vermont, Washington, and West Virginia. Additional states may join the settlement as the case progresses.
Abra had previously attracted scrutiny from state securities regulators, resulting in a parallel investigation that led to the recovery of $13.6 million for Abra customers, according to a statement from the Washington State Department of Financial Institutions.
Abra ceased accepting assets and conducting cryptocurrency transactions with U.S. customers on June 15, 2023. Despite the coordinated efforts by the CSBS Non-Depository Supervisory Committee urging states not to take individual enforcement actions, some states proceeded independently.
This is not the first time Abra has faced regulatory challenges. In 2020, the Securities and Exchange Commission fined Abra $300,000 for its involvement in trading synthetic assets. In June 2023, Texas regulators issued an emergency cease-and-desist order against Abra, alleging insolvency. Following a settlement with Texas in January, Abra restored funds to its Abra Earn and Abra Boost customers in the state.
An Abra spokesperson informed Cointelegraph that Abra continues to operate in the United States through SEC-registered Abra Capital Management.
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Bill Barhydt