The Texas State Securities Board has filed an emergency cease and desist order against crypto trading platform Abra and its chief executive Bill Barhydt. The watchdog claimed the company deceived customers and committed securities fraud by offering some of its products, such as Abra Earn.
The regulator added that the company had “secretly transferred assets” to Binance, noting that the US SEC recently targeted the world’s largest crypto exchange.
Insolvent since March?
The Texas Regulator maintained in its lengthy warning letter that Abra misled the public and engaged in fraud through the offering and sale of unregistered securities. The company allegedly violated existing laws by using its yield-generating product Abra Earn.
Although it removed this offer in October 2022, the platform then started selling investments through a similar product called Abra Boost. According to the watchdog, the change was another way to mislead and scam users.
A task force interviewed CEO Barhydt at the end of March this year, finding that “the parties collectively operating under the Abra name were collectively insolvent or nearly insolvent”.
It is worth mentioning that the organization has already been targeted by some of the major financial regulators in the United States – the SEC and the CFTC. The agencies imposed fined Abra and Plutus Tech $300,000 for allegedly selling illegal “security-based swaps” to retail investors.
The Texas State Securities Board also suggested that the entity secretly transferred funds to Binance. As of February, Abra had assets valued at more than $118 million at the crypto giant, the command says.
Binance also has a beef with US regulators. The SEC recently deposit a lawsuit against the exchange, its US subsidiary and CEO Changpeng Zhao, accusing them of offering trading services with unlicensed securities, including BNB and BUSD.
Additionally, Binance.US removed over 100 trading pairs including AAVE/USDT, MANA/USDT, BCH/BTC, DOT/BTC, MANA/BTC and XTZ/BTC after the Commission requested a freeze order.
Rise and fall of Abra
Founded in 2014 in Silicon Valley, Abra gained momentum in 2018 when it added support for 20 more cryptocurrencies, such as Bitcoin Cash (BCH) and Litecoin (LTC). Its expansion continued in the following years, peaking during the 2021 bull market.
At the time, Abra secure a fundraising of 55 million dollars, supported by some big names in the financial sector such as American Express.
The place of negotiation revealed its plans to launch two financial institutions, called Abra Bank (focused on US customers) and Abra International (designated for global users), in 2022.
“We believe that for Abra, this is a defining moment that brings us closer to our mission to make financial independence and well-being accessible to everyone, everywhere,” the company said at the time.
However, the prolonged crypto winter, which affected various digital asset organizations, also took its toll on Abra, and the company had to lay off 5% of its staff last summer.
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