Crypto lender Abra, also known as Plutus Financial, along with its other entities like Abra Boost and Plutus Lending, and founder William Barhydt have been accused by the Texas State Securities Board on Thursday of misleading the public, committing securities fraud, and being insolvent since March 31, 2023. Regulators alleged that Abra offered investments in Abra Earn and Abra Boost containing materially misleading statements, targeting Texas investors.
According to the filing, Abra Trade and Plutus Lending have been secretly transferring assets to Binance Holdings Limited, which is currently facing legal proceedings by the U.S. Securities and Exchange Commission. It added that these entities held assets valued at $118,581,732 on Binance. Abra has enjoyed nearly ten years as a crypto lender, and in 2023 it announced partnerships with American Express to offer crypto rewards and an intent to launch a state-chartered bank.
While authorities have not yet scheduled a hearing on Abra’s situation, its various entities are still allowed to operate and let customers withdraw funds during this period. Abra reportedly holds around $30 million with Babel Finance, $8.8 million with Auros Tech Limited, $30 million with Genesis (owned by CoinDesk parent company Digital Currency Group), and $10 million with Three Arrows Capital, putting these funds at risk as all mentioned companies are going through liquidation or bankruptcy processes.
On March 31, 2023, regulators interviewed Barhydt and presented information suggesting Abra’s insolvency, which he did not contest. The filing stated that “at least as of the date of the interview, parties collectively operating as Abra were or were nearly insolvent.” Nonetheless, an affiliate or subsidiary of Plutus Financial Holdings Inc. posted on an official social media platform, denying the claims, stating, “There is no truth that Abra is bankrupt or about to be. It continues to operate normally like it always has throughout multiple bear markets since its launch back in 2014.”
The safety of investors and users is at risk and the potential consequences of the misleading information and fraudulent activities of Abra and its related entities. The Texas State Securities Board’s actions are aimed at protecting those investors and bringing the irregularities to the public’s attention.
As the situation unfolds, it is essential for those in the crypto community to keep up to date with official information to ensure their investments’ safety and remain cautiously optimistic about the future of the technology, markets and underlying foundation. In the meantime, the blockchain industry awaits the regulators’ next move to ensure accountability and maintain foundational trust for investors.
Source: Coindesk
