Crypto investment platform Abra and its founder and CEO, William “Bill” Barhydt, have settled with 25 state financial regulators over operating without the necessary money transmitting licenses. The settlement, announced by the Conference of State Bank Supervisors (CSBS) on Wednesday, mandates that Abra will return up to $82.1 million in crypto to its U.S. customers.
Key Settlement Terms
As part of the agreement, Abra will cease accepting crypto deposits from all U.S.-based Abra Trade customers. The company will also stop engaging in activities such as making, buying, selling, or trading cryptocurrencies for these customers. Furthermore, Barhydt has agreed not to participate in any money transmitting or money services business within the 25 settling states, except as a passive investor, for the next five years.
Regulatory Statements
CSBS Chair and Washington State Department of Financial Institutions Director, Charlie Clark, emphasized the importance of consumer protection and adherence to state laws. “State financial regulators take their role to protect consumers and prevent unlicensed activity seriously,” Clark stated in the press release. “Companies that do not operate within the bounds of state laws will be held accountable.”
States Involved
The settlement involves several states, including Washington, Arkansas, and Connecticut. Additionally, Abra has also reached settlements with state securities regulators in New Mexico and Texas for selling unregistered securities.
Abra’s Response and Future Operations
Abra expressed satisfaction with the agreement in an emailed statement. “Abra is pleased to enter into a Term Sheet negotiated with a working group from the Money Transmitters Regulators Association regarding the Abra App that Abra previously offered in the U.S.,” said an Abra spokesperson. The consent orders will settle all state matters related to the Abra App from March 2021 to June 2023.
Since June 2023, Abra has returned over $250 million, representing 99% of the assets held by U.S. retail customers using the Abra App. The company continues to operate in the U.S. through Abra Capital Management, an SEC-registered investment advisor. This entity allows clients to invest in crypto, earn yield, stake, and borrow against their crypto holdings.
CEO’s Comments
In a tweet, CEO Bill Barhydt reassured customers about the continued operation of Abra’s services. “Abra Private and Abra Prime are fully operational in the USA and internationally,” he said. “These are both fantastic services with big announcements coming in the next few days. If you are looking to invest in Bitcoin or crypto, abra.com can definitely help you.”
Regulatory Cooperation
The CSBS revealed that state money services business (MSB) regulators were alerted to Abra’s activities by state securities regulators last summer. The two groups worked collaboratively towards this settlement. Additional states are also permitted to join the multi-state settlement, further solidifying the regulatory framework surrounding Abra’s operations.
The settlement underscores the importance of regulatory compliance in the rapidly evolving crypto industry. By addressing past violations and committing to a more transparent operational framework, Abra aims to restore trust and ensure the protection of its customers moving forward.
