Crypto Investment Company Winds Down U.S. Operations Following Multi-State Securities Investigation

TRENTON – Attorney General Matthew J. Platkin, the Division of Consumer Affairs, and the Bureau of Securities (“the Bureau”) today urged New Jersey investors to redeem virtual assets remaining in their accounts on the Abra trading and lending platform as the California-based crypto company winds down its operations in the U.S. following a multistate investigation into Abra’s sale of interest-bearing crypto accounts that raised $116 million nationwide – including more than $2.97 million in New Jersey.

In an agreement with the Bureau, Abra and its CEO and founder William John “Bill” Barhydt have agreed to refund all virtual assets remaining on the Abra platform as part of a settlement in principle that would resolve allegations they sold the interest-bearing accounts, marketed as “Abra Boost” and “Abra Earn,” in violation of state securities laws.

“We have made it clear that firms creating new products tied to evolving technologies are not exempt from our securities laws,” said Attorney General Platkin. “Our Bureau of Securities will continue to ensure that investors purchasing securities in digital assets are afforded the same protections as investors purchasing stocks, bonds and other traditional products.”

“The agreement announced today requires Abra to return the funds it raised through the unlawful sale of unregistered securities in our state,” said Cari Fais, Acting Director of the Division of Consumer Affairs. “These funds belong to New Jersey investors, and we want to make sure investors get them back.”

Under the terms of the agreement, virtual assets in New Jersey accounts on the Abra platform will be converted to U.S. dollars and investor refund checks will be issued for amounts $10 and over. Amounts less than $10 will be left on the platform for investors to withdraw. Any uncashed checks or funds left on the Abra platform will be sent to the New Jersey Department of the Treasury’s Unclaimed Property Administration, where they can be claimed by respective owners at a later date. The agreement requires Abra to notify New Jersey customers how to remove assets from the platform.

“The Bureau strongly encourages New Jersey investors to withdraw their assets or accept the checks from the Abra platforms as soon as possible,” said Bureau Chief Elizabeth M. Harris. “We want to ensure that clients who purchased Abra financial products are able to recoup their investments.”

To withdraw their remaining funds, Abra investors with account balances of less than $10 can do so through the Abra app. They can contact support@abra.com with any withdrawal issues.

The parties to the settlement in principle include Plutus Financial Holdings Inc., Plutus Financial Inc. d/b/a Abra, Plutus Lending LLC, and Abra Boost LLC (collectively “Abra”) and Barhydt. Together, they offered Abra Earn to all U.S. clients and Abra Boost to accredited U.S. clients. Investors in both programs earned interest by depositing digital assets with Abra and authorizing Abra to lend client assets to institutional borrowers.

A working group of state securities regulators, led by the Texas State Securities Board, have been investigating the offers and sales of Abra Boost and Abra Earn. Beginning on June 15, 2023, various members of the working group, including the Bureau, began filing separate but coordinated enforcement actions against Abra and Barhydt.

Following the entry of these enforcement actions, Abra began winding down U.S. retail operations. Although clients have been able to withdraw their assets from Abra, cryptocurrencies valued at approximately $200,000 belonging to New Jersey investors currently remain on the Abra platform.

Under the settlement in principle, Abra confirmed it had ceased accepting Earn and Boost crypto assets from Abra customers, and ceased making, buying, selling, or trading cryptocurrencies available to Abra customers as of June 15, 2023.

As part of the settlement, Abra and Barhydt will enter a consent order with the Bureau requiring that they cease and desist from offering or selling unregistered securities in violation of the securities laws to New Jersey residents and assesses an administrative penalty, which will be suspended if they comply with the process to return all assets owned by New Jersey investors.

The Bureau’s investigation was handled by Amy Kopleton, Deputy Bureau Chief, and Investigator Delfin Rodriguez of the Bureau of Securities, within the Division of Consumer Affairs. The Bureau is represented by Deputy Attorney General Evan A. Showell, Assistant Section Chief of the Securities Fraud Prosecution Section in the Division of Law’s Affirmative Civil Enforcement Practice Group.

The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors “Check Before You Invest.” Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau’s website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance or to raise issues or complaints about New Jersey-based financial professionals or investments.

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