SEC Settles Charges Against Plutus Lending LLC (Abra)

The United States Securities and Exchange Commission (SEC) settled charges against Plutus Lending LLC, operating as Abra, for offering and selling unregistered crypto asset securities through its lending product.

Allegations

The SEC alleged that Abra operated as an unregistered investment company. The complaint focused on its yield-earning service, Abra Earn, which allowed U.S. users to earn interest on their cryptocurrency. The regulator claimed that Abra used customer digital assets to generate income and fund interest payments while selling unregistered securities.

Settlement Details

To settle the allegations, Abra consented to an injunction that prohibits further violations of the Securities Act and the Investment Company Act. Abra also agreed to pay civil penalties to be determined by the court, without admitting to any wrongdoing.

Abra Earn reportedly generated nearly $600 million in crypto assets, with $500 million originating from U.S. customers.

SEC Associate Director Stacy Bogert stated, “As alleged, Abra sold nearly half a billion dollars of securities to U.S. investors, without complying with registration laws.” The SEC also cited concerns about investor protections due to Abra’s alleged violations of the Investment Company Act.

Response from Abra

In a statement to The Block, an Abra spokesperson said:

“Plutus Lending LLC (PLL) has agreed to settle an action brought by the SEC regarding Abra Earn, which was discontinued in 2022. Without admission of wrongdoing, PLL agrees to comply with securities laws. All assets for U.S. Earn customers were transferred to their Abra Trade accounts in 2023.” Abra claims no consumers were harmed by the settlement.

In June 2023, the Texas State Securities Board filed an enforcement action against Abra and its CEO for alleged securities fraud related to Abra Earn.

Updated, Mon. Aug. 26, 19:47 UTC: Added statement from Abra and clarified that this was a settlement from a 2020 charge.