Crypto Investment Platform Abra Settles With 25 States for Operating Without Licenses, Will Return Up to $82M to U.S. Customers

As part of the settlement agreement, Abra pledged to stop accepting crypto deposits from U.S.-based Abra Trade customers.

Crypto investment platform Abra and its founder and CEO William "Bill" Barhydt have settled with 25 state financial regulators for operating its mobile application without the proper licenses, according to a Wednesday announcement from the Conference of State Bank Supervisors (CSBS).

As part of the settlement agreement, Abra has pledged to return up to $82.1 million in crypto to U.S. customers in the settling states. Abra will also stop accepting crypto allocations from all U.S. Abra Trade customers, and has agreed not to be “making, buying, selling or trading cryptocurrencies” to Abra Trade customers in the U.S.

Barhydt has also agreed not to participate “in any capacity” in the business of any money transmitting or money services business in any of the 25 settling states, other than as a passive investor, for five years.

"State financial regulators take their role to protect consumers and prevent unlicensed activity seriously," said CSBS Chair and Washington State Department of Financial Institutions Director Charlie Clark in the press release. "Companies that do not operate within the bounds of state laws will be held accountable."

Washington, Arkansas and Connecticut are some of the states involved in the settlement.

Abra’s settlement with state financial regulators for unlicensed money transmitting activity comes in addition to the firm’s settlements with certain state securities regulators, including New Mexico and Texas, for selling unregistered securities.

"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.," said an Abra spokesperson in an emailed statement.

"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," the spokesperson said. "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. Abra continues to operate in the United States through Abra Capital Management, an SEC-registered investment advisor, that allows clients to invest in crypto, earn yield, stake and borrow against their crypto holdings."

In a tweet, Abra CEO Bill Barhydt said that "Abra Private and Abra Prime are fully operational in the USA and International."

"These are both fantastic services with big announcements coming in the next few days," he said. "If you are looking to invest in Bitcoin or crypto abra.com can definitely help you."

In its Wednesday announcement, CSBS said that state money services business (MSB) regulators were tipped off about Abra by state securities regulators last summer, and that "state financial regulators collaborated with the securities regulators and worked on a parallel path to settlement."

Additional states are allowed to join in the multi-state settlement.

UPDATE (June 26, 2024, 21:00 UTC): Adds tweet from Abra's Bill Barhydt.

Cheyenne Ligon is a CoinDesk news reporter with a focus on crypto regulation and policy. She has no significant crypto holdings.

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