Another Crypto Firm Hit With Securities Fraud Complaint After Allegedly Secretly Transferring Assets To Binance

Crypto trading platform Abra is facing serious allegations of securities fraud and insolvency, with the Texas State Securities Board filing an emergency cease and desist order against the company and its CEO, Bill Barhydt, citing deceptive practices that misled investors. These allegations come as a blow to Abra, which has previously faced regulatory issues and paid multiple penalties.

According to the filing made on Thursday, Abra is accused of misleading investors through its Abra Earn and Abra Boost crypto interest accounts. The regulator claims that the company secretly transferred assets to Binance Holdings Ltd., a company recently sued by the US Securities and Exchange Commission for operating an unregistered crypto exchange.

Abra, which raised $55 million in 2021 from prominent investors such as Amex Ventures, Arbor Ventures, and Kenetic Advisors, has been entangled in regulatory issues in the past. Last year, the company joined forces with American Express Co., aiming to launch a crypto credit card on the AmEx network. However, Abra’s financial woes led to a reduction in its workforce by 5% in both the US and Asia.

The allegations made by the Texas State Securities Board paint a dire picture for Abra. They claim that the company has been insolvent since at least March 31, 2023. The emergency cease-and-desist order accuses Abra, also known as Plutus Financial, Abra Boost, Plutus Lending, and founder Barhydt of deceiving the public and committing securities fraud.

Despite attempts to reach out to Barhydt for comment, he has remained silent on the matter. Abra’s representative also failed to respond to a request for comment at the time of reporting.

The regulator alleges that Abra offered investments in Abra Earn and Abra Boost, but these investment opportunities contained misleading statements. It also highlights that Abra and Plutus Lending have been secretly transferring assets to Binance Holdings Limited, with assets valued at $118,581,732 on as of February 2023. The recent lawsuit against Binance by the US Securities and Exchange Commission adds weight to these allegations.

Texan regulators are now seeking to hold a hearing on the matter, although no date has been set yet. In the meantime, Abra and its entities are still permitted to allow customers to withdraw funds. However, the situation remains precarious for Abra, as it faces allegations of insolvency and the potential consequences that may follow.

According to the regulator, Abra has substantial funds in Babel Finance, Genesis, and Three Arrows Capital, all of which are involved in various liquidation or bankruptcy processes. Additionally, it holds funds on Auros Tech Limited, a company that went through liquidation but has since emerged from that process.

During the interview with regulators in March, Barhydt did not contest the conclusion that Abra was insolvent. The filing also highlights conflicting information, as an official social media post from Plutus Financial Holdings, Inc. or its affiliate or subsidiary, denied the company’s bankruptcy claims. The post stated that Abra continues to operate normally, just as it has during multiple bear markets since its launch in 2014.

Prominently, Abra is yet one of the crypto firms that the platform Real Vision has endorsed. The latter has previously promoted some of the crypto enterprises that have since crashed, including Terra and Solana.

Abra’s case comes on the heels of two noted crypto firms halting withdrawals. South Korean digital-asset platform Delio and Singapore-based Haru Invest both paused transactions on their platforms this week.

“In order to safely protect the assets of customers currently in custody, Delio will inevitably suspend withdrawals temporarily as of June 14,” the platform said in a notice translated from Korean, citing a “sharp increase in market volatility and increased confusion among investors.”

Meanwhile, Haru cited “a certain issue” with one of its partners as a reason for the withdrawal halt.

Information for this briefing was found via Bloomberg, CoinDesk, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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