Cryptocurrency company Abra has agreed to terms with 25 states, resolving allegations of unauthorized business operation without a necessary license.
In a significant development, the cryptocurrency trading platform Abra has agreed to repay up to $82 million in assets to customers as part of a settlement with 25 state financial regulators. The key information regarding this settlement is that Abra reached an $82.1 million settlement in June 2024 specifically for operating without the required money transmission licenses across those states.
The settlement, announced by the Conference of State Bank Supervisors (CSBS), mandates Abra to comply with licensing regulations going forward to operate legally within those jurisdictions. Abra's CEO, Bill Barhydt, is personally barred from involvement in money transmission services within those states for five years.
The regulatory troubles for Abra extend beyond these licensing issues. The platform has faced accusations of securities fraud in Texas and warnings from the UK's Financial Conduct Authority for unauthorized services. Abra stopped offering crypto transactions to U.S. customers through its app due to these issues, which forced a cessation of operations and required the return of customer funds.
Despite these challenges, Abra has launched new services. Abra Prime and Abra Private were launched in April and are both fully operational in the U.S., with Securities and Exchange Commission approval to operate as a registered investment advisor. However, the details about the settlement with Texas and certain state securities regulators around Abra Earn were not provided.
The settlement does not cover Abra Earn, and there is no publicly detailed breakdown of the new purchase licensing rights Abra must specifically obtain under the settlement. The general framework requires them to acquire all necessary state money transmission licenses to resume lawful operations in those 25 states.
It is essential to note that the states involved in the settlement with Abra include Alaska, Alabama, Arizona, Arkansas, Connecticut, District of Columbia, Georgia, Idaho, Iowa, Maine, Minnesota, Mississippi, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Vermont, Washington, and West Virginia.
Abra must continue to repay up to $82 million in assets to customers as part of the settlement. Each state agreed to forgo imposing a monetary penalty of $250,000 per jurisdiction to ensure customer repayment. As of now, over 99% of funds have been claimed, and Abra has returned all but ~$2M waiting to be claimed from Abra App users in the U.S.
Despite the settlement, Bill Barhydt reassured users on Twitter that it was "business as usual at Abra." The company continues to operate and offer its services, albeit under strict regulatory oversight and with a renewed focus on compliance.
- The settlement, instigated by the financial regulatory body Conference of State Bank Supervisors (CSBS), mandates that Abra, a fintech firm, obtains necessary state money transmission licenses to lawfully conduct business and finance operations within the specified 25 states, which include Alaska, Alabama, Arizona, and others.
- In light of the settlement and regulatory challenges faced by Abra, the fintech industry, driven by technology, has witnessed the firm launching new ventures such as Abra Prime and Abra Private, with an emphasis on compliance and securing state-mandated licensing, indication of a transformation in the business landscape of fintech.
