Abra will reimburse US customers up to $82.1 million as part of a settlement with 25 states regarding unlicensed operations.
TakeAway Points:
- Abra and CEO Bill Barhydt agreed to reimburse US consumers for up to $82.1 million in cryptocurrency in order to resolve their legal issues with 25 states.
- Abra will stop taking cryptocurrency trade requests and allocations from US clients, and Barhydt will be prohibited from working in the money services industry for five years.
- Over $250 million has already been repaid to U.S. retail customers since June 2023 as part of the settlement, which settles state disputes pertaining to the Abra App from March 2021 to June 2023.
Abra’s Agreement with State Authorities
Crypto investment platform Abra and its founder and CEO William “Bill” Barhydt have reached a settlement with 25 state financial regulators for operating its mobile application without the necessary licenses. The Conference of State Bank Supervisors (CSBS) announced the settlement on Wednesday.
Under the terms of the agreement, Abra will return up to $82.1 million in cryptocurrency to U.S. customers in the settling states. Additionally, Abra has agreed to cease accepting crypto allocations from all U.S. Abra Trade customers and to stop “making, buying, selling or trading cryptocurrencies” to Abra Trade customers in the U.S.
Barhydt has also agreed to refrain from participating “in any capacity” in the business of any money transmitting or money services business in any of the 25 settling states, except as a passive investor, for a period of five years. CSBS Chair and Washington State Department of Financial Institutions Director Charlie Clark emphasized the importance of regulatory compliance, stating, “State financial regulators take their role to protect consumers and prevent unlicensed activity seriously. Companies that do not operate within the bounds of state laws will be held accountable.”
The settlement with state financial regulators for unlicensed money transmitting activity is in addition to Abra’s settlements with certain state securities regulators, including New Mexico and Texas, for selling unregistered securities. An Abra spokesperson expressed satisfaction with the settlement, stating, “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.”
Impact on Finances and Customer Compensation
The settlement agreement stipulates that Abra will return up to $82.1 million in cryptocurrency to U.S. customers in the settling states. According to an Abra spokesperson, “Since June 2023, 99% of assets held by U.S. retail customers of Abra using the Abra App have already been returned – over $250 million.” This indicates that the company has already taken significant steps to reimburse its customers.
The CSBS revealed that state money services business (MSB) regulators were alerted to Abra’s activities by state securities regulators last summer. The two regulatory bodies collaborated to reach a parallel settlement. Additional states are permitted to join the multi-state settlement, potentially increasing the financial impact on Abra.
Future Operations and Regulatory Compliance
As part of the settlement, Abra has agreed to cease accepting crypto allocations from all U.S. Abra Trade customers and to stop “making, buying, selling or trading cryptocurrencies” to Abra Trade customers in the U.S. This move is aimed at ensuring compliance with state regulations and preventing unlicensed activities. Barhydt’s agreement to refrain from participating in any money transmitting or money services business in the 25 settling states for five years further underscores the regulatory scrutiny faced by the company.
Despite these restrictions, Abra continues to operate in the United States 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. The company’s spokesperson highlighted this ongoing operation, stating, “Abra continues to operate in the United States through Abra Capital Management, an SEC-registered investment advisor.”
