The U.S. Securities and Exchange Commission (SEC) has filed settled charges against Plutus Lending LLC, operating as Abra, for failing to register the offers and sales of its crypto asset lending product, Abra Earn. The SEC also accused Abra of operating as an unregistered investment company, further complicating the firm’s regulatory standing.
SEC Charges Abra With Unregistered Sales of Crypto Asset Securities
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Editor’s Note: This story’s ending was updated on Aug. 27, 2024, with a quote from an Abra spokesperson.
SEC Targets Abra for Unregistered Crypto Asset Sales
The SEC’s complaint highlights that Abra began offering and selling its Abra Earn product in the United States in July 2020. This product allowed U.S. investors to lend their crypto assets to Abra in exchange for variable interest payments.
At its peak, the SEC claims the program managed approximately $600 million in assets, nearly $500 million of which came from U.S. investors. The SEC alleges that Abra Earn was marketed in a misleading manner and constituted an unregistered security, thereby violating federal securities laws.
“As alleged, Abra sold nearly half a billion dollars of securities to U.S. investors, without complying with registration laws designed to ensure that investors have sufficient, accurate information to make informed decisions before they invest,” Stacy Bogert, the associate director of the SEC’s Division of Enforcement remarked.
In addition to the securities charges, the SEC claims that Abra operated as an unregistered investment company for at least two years. This was due to its practice of holding more than 40% of its total assets in investment securities, including loans of crypto assets to institutional borrowers.
Abra began winding down the Abra Earn program in June 2023, instructing U.S. customers to withdraw their assets. The company has consented to an injunction against future violations and awaits the determination of civil penalties by the court.
“Plutus Lending LLC (PLL), a subsidiary of Abra, has agreed to settle an action brought by the SEC regarding Abra Earn, a service that was discontinued in 2022,” an Abra spokesperson told Bitcoin.com News.
“Without admission of wrongdoing, PLL agrees to continue to comply with securities laws. No consumers were harmed at all by the settlement or wind down of Abra Earn. All assets for US Earn customers including accrued interest were transferred to their Abra Trade accounts in 2023. Abra continues to operate in the USA via Abra Capital Management, an SEC-registered investment advisor,” the Abra spokesperson added.
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