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Texas Securities Board Orders Crypto Lender Abra to Return Assets to Investors

Crypto lender Abra has reached an agreement with the Texas State Securities Board to release customers’ frozen funds. This resolution follows the issuance of an emergency cease and desist order by the authority, which had accused the company of engaging in securities fraud.

According to the settlement agreement published on Monday, the Texas regulator has mandated that Abra return assets to customers in Texas and other U.S. locations.

In June 2023, the Board had alleged that Abra, along with affiliated entities including its CEO, Bill Barhydt, had been involved in deceptive investment offerings. Abra had portrayed itself as a “crypto bank” and had promoted Abra Boost as a “product that enables you to essentially engage in crypto-based savings.”

Furthermore, the regulator had also accused the plaintiffs, including Plutus Financial, which is also under Barhydt’s control, of covertly transferring assets to Binance.

The settlement announcement made on Monday specified that it would address the alleged frauds related to Abra’s offerings. “The settlement pertains to their purported sale and promotion of interest-bearing cryptocurrency deposit products known as Abra Boost and Abra Earn.”

As a result of this settlement, investors will have the opportunity to withdraw their assets from their accounts. Furthermore, the Texas State Securities Board has directed Abra to convert any unclaimed assets into fiat currency before issuing checks to investors in Texas.

Texas Securities Commissioner Travis J. Iles, when commenting on the enforcement action, commended the state’s robust securities laws, stating, “Existing securities laws are well-equipped to safeguard investors, whether they are purchasing traditional products such as stocks or bonds or new and innovative securities linked to digital assets and emerging technologies. I am pleased to see these tools effectively employed in Texas.”

Repaying 12,000 Investors

According to the regulator’s assertions, Abra had custody of cryptocurrencies amounting to $13.6 million on behalf of more than 12,000 U.S. investors. This figure encompasses crypto assets held by 1,600 residents of Texas, with an approximate value of $1.8 million.

Joe Rotunda, the Enforcement Director, emphasized that substantial financial losses like these can have a “devastating impact” on the daily lives of investors. He highlighted the priority of the settlement being the return of funds to retail investors. The enforcement team has also urged local investors to regularly monitor their mail for correspondence from the agency and follow any instructions provided by Abra.

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I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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