Abra has been insolvent since March, says Texas regulator.

The Texas regulators have accused Abra, a crypto lending firm, of securities fraud and insolvency since March 31, despite once handling more than $116 million in assets. In an enforcement action taken on June 15, the Texas State Securities Board has charged Abra and its founder William Barhydt of securities fraud and deception in relation to the sale of investment products through its affiliates Abra Earn and Abra Boost. The regulators have also accused the firm of being insolvent as of March 31. Abra was founded in 2014 and allowed both retail and institutional investors to trade, lend and borrow crypto assets. Abra has not yet responded to the allegations.

According to the regulators, Abra allegedly concealed financial information regarding the capitalization of parties, defaults on loans and the transfer of assets to Binance. The regulator also alleges that Barhydt and Abra made misleading statements to the public regarding investments in Abra Earn in Texas. Although Abra announced it would cease selling investment in Abra Earn in October 2022, the regulators claim that the firm continued to sell investments in Abra Boost to accredited and institutional investors in the United States.

Abra and its affiliates held approximately $116.79 million of assets under management for Abra Earn and Abra Boost investors in the US as of May 17. Despite an unnamed affiliate claiming on social media that “Abra is not bankrupt” as recently as June 11, the regulators accuse the firm of being insolvent or nearly insolvent as of March 31. Abra had announced plans to become the first US-based bank that would allow clients to deposit digital assets, but it began laying off employees and “restructuring” to minimize overheads following the collapse of FTX in November last year.

In July 2020, the Securities and Exchange Commission and Commodity Futures Trading Commission issued Abra with a joint fine of $300,000 for offering “security-based swaps” to retail investors without proper registration, in addition to “failing to transact those swaps on a registered national exchange.”

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