According to Texas regulators, Abra, a crypto lending firm that previously managed over $116 million in assets, is facing allegations of securities fraud and has been insolvent since March 31.
The Texas State Securities Board has taken action against Abra and its founder, William Barhydt, issuing an emergency cease and desist order.
The board accuses Abra of securities fraud and deceptive practices related to the sale of investment products through its affiliates, Abra Earn and Abra Boost.
“The alleged misconduct includes the intentional concealment of financial information reflecting the capitalization of parties, defaults on loans, and the transfer of assets to Binance,” the regulator said.
Founded in 2014 by Barhydt, Abra facilitated trading, lending, and borrowing of crypto assets for both retail and institutional investors.
As of May 17, 2023, Abra held approximately $116.79 million of assets under management for investors in the United States through Abra Earn and Abra Boost.
The regulator alleges that Barhydt and Abra made misleading statements in their investment offers for Abra Earn in Texas, intending to deceive the public.
Despite Abra’s announcement in October 2022 about ceasing investment sales in Abra Earn, the firm, and its affiliates continued to offer and sell investments in Abra Boost to accredited and institutional investors in the United States.
The state regulator also accuses Abra of being “nearly insolvent” as of March 31, contradicting claims made by an unnamed affiliate on social media on June 11 that Abra is not bankrupt.
Cointelegraph reached out to Abra and Barhydt for comment but did not receive an immediate response.
In a September 12, 2022 announcement, Abra revealed its plans to become the first US-based bank to enable clients to deposit digital assets. The launch of this venture was scheduled for early 2023.
However, following the collapse of FTX in November of the previous year, Abra initiated layoffs and underwent a restructuring process to reduce overhead costs.
On July 13, 2020, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) jointly fined Abra $300,000. The fine was imposed due to Abra offering “security-based swaps” to retail investors without proper registration and failing to transact those swaps on a registered national exchange.
