Recently, the company Abra and its CEO William Barhydt were involved in a settlement with 25 US state regulators for providing crypto trading services without the necessary licenses. The agreement included a waiver of monetary penalties totaling $250,000 per jurisdiction in exchange for $82 million in customer refunds. Abra also agreed to cease accepting crypto from US customers by June 15, 2023, and reimburse any outstanding balances.
As part of the settlement, Barhydt was prohibited from engaging in money services businesses that are licensed or mandated to obtain licenses in the states involved in the agreement. However, he was allowed to remain as a passive investor for a period of five years. It is worth noting that Barhydt is the largest equity owner of Abra, which adds another layer of complexity to the situation.
Washington was the first state to release its consent order in connection with the settlement, revealing that 706 users in the state had a remaining balance of $116,000.78 on the platform. The state also disclosed that $13.6 million had been returned to customers thus far. The Conference of State Bank Supervisors highlighted the roles of several states, including Arkansas, Connecticut, and Texas, in the resolution process. Additionally, 18 other states participated in the settlement, with more expected to join as the case progresses.
Abra’s Response and Operations
In response to the settlement, Abra announced the winding down of its US operations, which entailed discontinuing services for US app users and consumers. However, the company clarified that its activities outside the US would continue without interruption. Reuters reported that Abra Capital Management, the firm’s institutional service, remained operational in the US and had obtained registration with the SEC.
The saga involving Abra and state regulators began with officials raising concerns about the company’s activities in mid-2023. Following the disclosure of these activities, a series of settlements unfolded, including an emergency cease and desist order issued by the Texas State Securities Board regarding Abra’s interest-bearing products. Subsequently, the securities regulator in New Mexico reached a settlement with Abra in April, further underscoring the breadth of the fallout from the regulatory scrutiny.
The settlement reached between Abra, William Barhydt, and state regulators signifies a pivotal moment in the company’s trajectory. The agreement not only involved substantial customer refunds and operational changes but also placed restrictions on key stakeholders. As the dust settles from this ordeal, the crypto community will be monitoring Abra’s future actions and the evolving regulatory landscape with keen interest.
