American Express-Backed Crypto Platform Slammed With Fraud Charges by Texas Regulator

The Texas State Securities Board filed an emergency cease and desist order against crypto trading platform Abra and its Chief Executive Officer Bill Barhydt. The watchdog claimed that the company misled its customers and committed securities fraud by offering some of its products, such as Abra Earn.

The regulator added that the firm has been “secretly transferring assets” to Binance, noting that the US SEC has recently targeted the world’s biggest crypto exchange.

Insolvent Since March?

The Texas regulator maintained in its lengthy cautionary letter that Abra deceived the public and engaged in fraud via the offer and sale of unregistered securities. The company supposedly violated existing laws using its yield-earning product Abra Earn.

While it removed that offering in October 2022, the platform later started selling investments through a similar product called Abra Boost. According to the watchdog, the shift was another way to mislead and scam users. 

A working group interviewed CEO Barhydt at the end of March this year, estimating that “parties collectively operating as Abra were collectively insolvent or nearly insolvent.” 

It is worth mentioning that the organization has already been a target for some of the top financial regulators in the USA – the SEC and the CFTC. The agencies imposed a fine of $300,000 on Abra and Plutus Tech for the alleged sale of illegal “security-based swaps to retail investors.” 

The Texas State Securities Board also suggested that the entity has been secretly moving funds to Binance. As of February, Abra had assets valued at over $118 million at the crypto behemoth, the order reads. 

Binance also has a beef with American regulators. The SEC recently filed a lawsuit against the exchange, its US affiliate, and CEO Changpeng Zhao, accusing them of offering trading services with unlicensed securities, including BNB and BUSD. 

In addition, Binance.US delisted over 100 trading pairs, including AAVE/USDT, MANA/USDT, BCH/BTC, DOT/BTC, MANA/BTC, and XTZ/BTC after the Commission requested a freezing order.

Abra’s Rise and Fall

Found in 2014 in Silicon Valley, Abra gained momentum in 2018 when it added support to 20 additional cryptocurrencies, such as Bitcoin Cash (BCH) and Litecoin (LTC). Its expansion continued in the following years, reaching a peak during the bull market in 2021.

Back then, Abra secured a $55 million fundraiser, supported by some prominent names in the finance sector like American Express. 

The trading venue revealed its intention to launch two financial institutions, called Abra Bank (focused on American clients) and Abra International (designated for global users), in 2022. 

“We believe that for Abra, this is a defining moment that brings us closer to our mission to make financial independence and well-being accessible to everyone, everywhere,” the firm said at the time.

However, the prolonged crypto winter, which affected various digital asset organizations, took its toll on Abra, too, and the firm had to dismiss 5% of its staff last summer.