The U.S. Securities and Exchange Commission (SEC) has filed settled charges against Abra for offering unregistered crypto asset securities and operating as an unregistered investment company. The SEC’s complaint also alleges that Abra operated for at least two years as an unregistered investment company because it issued securities and held more than 40% of its total assets, excluding cash, in investment securities, including its loans of crypto assets to institutional borrowers.
Short Narrative:
The SEC announced charges against Plutus Lending LLC, known as Abra, for failing to register the offers and sales of its crypto asset lending product, Abra Earn, and for operating as an unregistered investment company. From July 2020, Abra offered Abra Earn to U.S. investors, allowing them to earn interest on crypto assets without registering the product as a security. At its peak, Abra Earn held about $600 million in assets, with nearly $500 million from U.S. investors. The SEC also alleged that Abra operated as an unregistered investment company by issuing securities and holding a significant portion of its assets in investment securities.
Key Details:
- Defendants: Plutus Lending LLC d/b/a Abra
- Charges Filed: Abra is accused of offering unregistered securities and operating as an unregistered investment company.
- Product Details: Abra Earn allowed investors to earn variable interest on crypto assets, which Abra used to generate income and fund interest payments.
- Regulatory Violations: The SEC alleges Abra violated Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 7(b) of the Investment Company Act of 1940.
- Settlement: Abra agreed to an injunction and will pay civil penalties to be determined by the court, without admitting or denying the SEC’s allegations.
Actionable Insight:
This case highlights the importance of complying with SEC registration laws and regulations when offering crypto assets to U.S. investors, emphasizing the need for transparency and protection against conflicts of interest.
Read More: read the SEC press release here.
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