SEC charges Abra with unregistered sale of crypto asset securities in Abra Earn

The United States Securities and Exchange Commission charged Plutus Lending LLC, operating as Abra, with offering and selling unregistered crypto asset securities in its crypto lending product.

The agency also alleged that the financial services and tech firm operated as an unregistered investment company, according to an official release by the regulator. 

The SEC complaint centers around the firm's yield-earning service, Abra Earn, which permitted U.S. users to earn interest on their crypto. Abra purportedly used customer digital assets "to generate income for itself and to fund interest payments" as well as offer and sell securities that "did not qualify for an exemption from SEC registration."

Abra Earn brought in nearly $600 million in crypto assets, $500 million of which came from U.S. customers, the SEC adds. 

"As alleged, Abra sold nearly half a billion dollars of securities to U.S. investors, without complying with registration laws designed to ensure that investors have sufficient, accurate information to make informed decisions before they invest," said Associate Director of the SEC’s Division of Enforcement Stacy Bogert in a statement. "To compound the potential harm to investors, Abra allegedly sold its own securities while skirting applicable Investment Company Act provisions that provide a number of important protections to investors, including minimizing conflicts of interest."

In June 2023, the Texas State Securities Board also filed an enforcement action against Abra and its CEO regarding Abra Earn for alleged securities fraud, The Block previously reported.