Crypto lending firm Abra, otherwise known as Plutus Financial, its related entities and its CEO William Barhydt were issued a cease and desist order by the Texas securities regulator on Thursday.
The regulator alleged that Abra and Barhydt had committed securities fraud and deceived investors over the sale of its investment products through its crypto interest accounts Abra Earn and Abra Boost.
Although the firm claims that Abra Trade accounts are custodied at Fireblocks, the regulators found that the firm’s related entities had funds worth only $43 million on the platform. Meanwhile, regulators said that Abra and Plutus Lending had been “secretly transferring assets” to Binance, where it held assets valued at $118 million as of February 2023.
The filing claims that Abra has $30 million on Babel Finance, $30 million on Genesis and $10 million on Three Arrows Capital (3AC) – all firms that are currently in the midst of their own bankruptcy proceedings.
Regulators said that when they presented information to Barhydt on March 31 indicating Abra was insolvent, he did not contest the conclusion.
“At least as of the date of the interview, parties collectively operating as Abra were or were nearly insolvent,” they said in the filing.
Founded in 2014, Abra announced big plans to launch new products this year, including a crypto rewards card powered by American Express and a state-chartered U.S. bank. The firm raised $55 million from high-profile investors in 2021, including Amex Ventures, Arbor Ventures and Kenetic Advisors.
At the time of writing, neither Barhydt nor the firm had commented on the Texas State Securities Board’s action.