Crypto Lender Abra Insolvent Since March, Says Texas Regulator
• Crypto lender Abra has been accused of securities fraud and insolvency by the Texas State Securities Board.
• The regulator claims that Abra had intentionally concealed financial information and transferred assets to Binance.
• Despite claims to the contrary, regulators claim that the firm was insolvent as of March 31.
Texas Regulator Accuses Crypto Lender Abra of Fraud
The Texas State Securities Board has issued an emergency cease and desist order against crypto lending firm Abra and its CEO William Barhydt, accusing them of committing securities fraud as well as engaging in deception regarding the sale of investment products through their affiliates Abra Earn and Abra Boost.
Allegations Against Abra
The regulator alleges that Barhydt and Abra made offers of investments in Abra Earn containing statements that were materially misleading or otherwise likely to deceive the public. It is also alleged that even after announcing they would cease selling investment in Abra Earn in October 2022, they instead began offering investments in Abra Boost – a digital asset depository account – to accredited investors in the US.
Insolvency Alleged
Regulators have also accused the firm of being insolvent or nearly so since March 31st – despite claims on social media which stated otherwise. As of May 17th, it was reported that collectively held approximately $116.79 million of assets under management for investors in the US through both services.
Consequences for Barhydt & Co.
As a result of these allegations, both Barhydt and his company are facing repercussions from regulators including an emergency cease and desist order as well as potential charges relating to securities fraud..
Abra’s Response
Abra has responded with claims that they have no direct exposure to Silicon Valley Bank or Silvergate Bank nor are they bankrupt, stating all services remain fully operational with any USD held within their system being safe to convert into other supported crypto assets such as Tether, Ethereum or Bitcoin.
