Abra Settles with 25 U.S. States Over Unlicensed Crypto Operations, to Return $82M to Customers

Cryptocurrency investment platform Abra and its CEO William Barhydt have reached a settlement with financial regulators from 25 U.S. states over allegations of operating without proper licensing. The agreement, announced on June 27, 2024, marks a significant development in the ongoing regulatory scrutiny of crypto firms in the United States.

The settlement, led by a working group of regulators from eight states including Arkansas, Connecticut, and Washington, requires Abra to cease its cryptocurrency trading and investment services for U.S. customers. More importantly, the company has agreed to return up to $82.1 million in virtual assets to affected customers across the settling states.

Charlie Clark, Chair of the Conference of State Bank Supervisors (CSBS) and Director of the Washington State Department of Financial Institutions, emphasized the regulators’ commitment to consumer protection, stating, “Companies that do not operate within the bounds of state laws will be held accountable.”

As part of the agreement, Abra CEO William Barhydt is barred from participating in any licensed money transmitter or money services business activities in the settling states for five years, except as a passive investor. This restriction underscores the personal accountability being placed on executives in the crypto industry.

To prioritize customer reimbursement, the 25 states involved in the settlement have agreed to forgo individual penalties of $250,000 each. This decision aims to maximize the funds available for returning to affected Abra customers.

The settlement comes in the wake of previous regulatory challenges for Abra. Earlier in 2024, the company settled with the Texas State Securities Board over allegations of securities fraud related to its Abra Earn and Abra Boost programs.

Despite these setbacks, Abra maintains its presence in the U.S. market through Abra Capital Management, an SEC-registered investment advisor. This entity continues to offer services such as crypto investments, yield earning, staking, and borrowing against crypto holdings.

An Abra spokesperson expressed satisfaction with the settlement, stating, “The corresponding consent orders will settle all state matters related to the Abra App in the U.S. for the period from March 2021 to June 2023.”

This case highlights the increasing regulatory scrutiny faced by cryptocurrency firms in the United States and underscores the importance of proper licensing and compliance in the rapidly evolving digital asset landscape.