Abra, along with CEO William “Bill” Barhydt, has recently come to a settlement with 25 US state regulators for providing cryptocurrency trading services without the necessary licenses. This agreement was announced in a press release from the Conference of State Bank Supervisors (CSBS) on June 26. As part of the settlement, the regulators decided to waive monetary fines of $250,000 per state, amounting to $82 million in total repayments to customers. Moreover, Abra agreed to cease accepting crypto assets from US customers by June 15, 2023, and refund any remaining balances to these customers. Additionally, Barhydt has been prohibited from participating in money services businesses that are either licensed or required to be licensed in the states involved in the settlement. However, he may continue as a passive investor for a period of five years.
Washington was the first state to release its consent order, revealing that 706 users still had a collective balance of $116,000.78 on the platform. Despite this, customers in Washington had already received $13.6 million in refunds. The CSBS highlighted the involvement of Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, and Vermont in the settlement, with 18 other states, including Washington, also participating. It was mentioned that other states would issue their own consent orders in the upcoming weeks or months, and there was a possibility of more states joining the settlement as the case progressed.
Abra started winding down its operations in the US in June 2023, announcing the discontinuation of services for US app users and various other consumer services. Nevertheless, the company assured that its operations outside the US would remain unaffected. Despite these changes, it was noted that Abra’s institutional service, Abra Capital Management, was still in operation in the US and registered with the SEC. The process of winding down Abra’s US operations coincided with state securities regulators informing money services business (MSB) regulators of the company’s activities, ultimately leading to the pursuit of settlements. In fact, the Texas State Securities Board issued an emergency cease and desist order against Abra for its interest-bearing products in mid-2023, resulting in a settlement in January. Similarly, New Mexico’s securities regulator also reached a settlement with Abra in April.
By examining the case of Abra and CEO Bill Barhydt’s settlement with US state regulators, it is evident that compliance with regulatory requirements is crucial in the cryptocurrency industry to avoid penalties and legal repercussions. This serves as a reminder to companies operating in this space to prioritize obtaining the necessary licenses and approvals to maintain a lawful and sustainable business model.
Leave a Reply