Abra's Legal Hurdle Resolved

Cryptocurrency platform Abra and its associated companies, along with CEO William Barhydt, have reached a significant settlement with 25 U.S. states.

The agreement resolves allegations of operating without the appropriate licenses. This settlement resulted from a thorough investigation led by a working group of regulators from eight states.

The Investigation

Financial regulators from Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, Vermont, and Washington determined that Abra operated an unlicensed mobile app.

This app facilitated the buying, selling, and trading of cryptocurrencies, which required proper licensing under state laws. Washington took the lead in negotiating the settlement for the involved states.

Terms of the Settlement

According to a statement by the Conference of State Bank Supervisors (CSBS), the settlement includes a provision where the states will not impose penalties of $250,000 each. Instead, Abra will return up to $82.1 million and all remaining virtual assets to its customers in the settling states.

William Barhydt, Abra's primary equity holder, also agreed to abstain from participating in any licensed money transmitter or money services business activities, except as an investor, in these states for the next five years.

"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."

Participation and Future Prospects

The states currently participating in the settlement are 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. The CSBS noted that other states can join the settlement as the case progresses.

Historical Context

This is not the first time Abra has faced legal issues. State securities regulators previously investigated the platform, leading to the recovery of $13.6 million for Abra customers. In June 2023, Abra halted accepting assets and conducting cryptocurrency transactions with U.S. customers.

The Securities and Exchange Commission (SEC) fined Abra $300,000 in 2020 for trading in synthetic assets. Moreover, Texas regulators issued an emergency cease-and-desist order to Abra in June 2023, citing insolvency concerns.

Abra's settlement marks a crucial step toward compliance and restitution for its U.S. customers. The resolution reflects the growing scrutiny and regulatory challenges cryptocurrency platforms face in the evolving financial landscape.