The emergency order issued by the Texas State Securities Board accused Abra (also known as Plutus Financial), Abra Boost, Plutus Lending, and Abra founder William Barhydt of deceiving the public, committing securities fraud, and operating while insolvent for a prolonged period.
A request for comment from Barhydt went unanswered, leaving his response unknown.
According to the regulator, Abra was alleged to have offered misleading investment opportunities through Abra Earn and Abra Boost.
As per the filing, Abra had presented deceptive investment proposals in Texas for Abra Earn, containing statements that were either significantly misleading or likely to deceive the public. Similar claims were made regarding other Abra products.
The filing revealed that Abra Trade and Respondent Plutus Lending had covertly transferred assets to Binance Holdings Limited, also known as Binance or Binance.com.
By February 2023, the total assets held by Abra Trade and Respondent Plutus Lending on Binance.com amounted to $118,581,732.
The filing also referenced the recent lawsuit filed against Binance by the U.S. Securities and Exchange Commission.
Abra, a cryptocurrency lender with nearly a decade of existence, had previously announced plans to collaborate with American Express in providing crypto rewards through a card.
Barhydt had expressed intentions to establish a state-chartered bank sometime in 2023.
The regulators intend to schedule a hearing regarding the matter, although no specific date has been set yet.
In the meantime, Abra and its affiliated entities are permitted to facilitate customer fund withdrawals, as indicated in the filing.
According to the regulator’s report, Abra holds slightly under $30 million with Babel Finance, $8.8 million with Auros Tech Limited, $30 million with Genesis (owned by the parent company of CoinDesk, Digital Currency Group), and $10 million with Three Arrows Capital.
All of these companies are undergoing separate liquidation or bankruptcy procedures.
Regulators interviewed Barhydt on March 31, 2023, and the information shared during the interview indicated Abra’s insolvency.
The filing noted that Barhydt did not contest this finding.
As stated in the filing, as of the interview date, the combined entities operating as Abra were either insolvent or on the brink of insolvency.
Nonetheless, Plutus Financial Holdings, Inc., or one of its affiliates or subsidiaries, took to an official social media platform to deny the bankruptcy claims against Abra.
The post emphasized that Abra has been operating normally since its launch in 2014, even during multiple bear markets.
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