SEC settles charges with Abra for sale of nearly $500 million in unregistered securities after Ripple lawsuit

The US Securities & Exchange Commission (SEC) settled charges against Abra, a crypto lending platform, for allegedly having violated securities law after selling around $500 million via its Abra Earn product. This settlement marks an important development in the crypto regulatory landscape since Abra did not admit or deny the regulator’s allegations but agreed to pay civil penalties to be determined by the court. 

In the Ripple lawsuit, the court determined that the payment-remittance firm violated securities law through the sale of unregistered securities to institutional investors. Pro-crypto lawyers shared their thoughts on the likelihood of the regulator appealing the final ruling in the SEC vs. Ripple lawsuit. 

The difference between the two enforcement actions by the SEC shows what crypto traders in the US can expect from the changing regulatory landscape. 

Abra does not admit or deny SEC allegations

Abra is a crypto platform that settled charges brought by the SEC against its Abra Earn product, according to a SEC statement published on Monday. Starting in 2020, the firm offered Abra Earn to customers and promised high returns in exchange. 

The Abra Earn program had nearly $600 million in user assets, of which $500 million was from the US. The SEC’s press release states that Abra operated as an investment company without registration for at least two years. 

The press release reads:

To settle the Commission’s charges, Abra, without admitting or denying the SEC’s allegations, has consented to an injunction prohibiting it from violating the registration provisions of the Securities Act and the Investment Company Act and requiring it to pay civil penalties in amounts to be determined by the court.

The presiding judge in the SEC vs. Ripple lawsuit stated that the firm violated securities laws through institutional sales of XRP, unlike the SEC’s enforcement action against Abra. The firm has settled charges without admitting the allegations. Previously, Abra already settled charges in 2020, and paid $150,000 each to the SEC and the Commodity Futures Trading Commission (CFTC), putting an end to the investigation into its swaps product. 

An Abra spokesperson told FXStreet:

“Plutus Lending LLC (“PLL”), a subsidiary of Abra, has agreed to settle an action brought by the SEC regarding Abra Earn, a service that was discontinued in 2022. Without admission of wrongdoing, PLL agrees to continue to comply with securities laws. No consumers were harmed at all by the settlement or wind down of Abra Earn.  All assets for US Earn customers including accrued interest were transferred to their Abra Trade accounts in 2023. Abra continues to operate in the USA via Abra Capital Management, an SEC-registered investment advisor.”

SEC less likely to appeal Ripple ruling

Pro-crypto attorney Bill Morgan said that the SEC is less likely to appeal the final ruling in the Ripple lawsuit. Attorney Morgan noted that the judge is clear in the reasoning and compared the lawsuit with that of SEC lawsuits against Payward Inc. and Binance.