Abra Earn: A Crypto Investment Platform Under Fire

Background

Abra, a crypto investment platform and lender, began offering Abra Earn to customers in 2020. The program promised high levels of returns for customers who allowed the firm to use their assets.

SEC Complaint

The Securities and Exchange Commission (SEC) filed a complaint against Abra, alleging that the company had failed to register as an investment company and had also failed to disclose material information to its customers.

Unregistered Investment Company

According to the SEC, Abra operated as an investment company without registering with the agency for at least two years. This is a violation of the Investment Company Act of 1940, which requires investment companies to register with the SEC and provide certain disclosures to investors.

Abra Earn Program

The Abra Earn program allowed customers to lend their assets to the company, which would then use those assets to generate returns. The program promised high levels of returns, with some customers earning as much as 10% per annum.

Scale of the Program

At its peak, the Abra Earn program had approximately $600 million in assets under management. Of this amount, almost $500 million came from U.S. investors.

SEC Allegations

The SEC alleged that Abra failed to disclose material information to its customers, including the risks associated with the Abra Earn program. The agency also alleged that the company failed to provide customers with adequate disclosures about the fees and expenses associated with the program.

Failure to Disclose Risks

The SEC alleged that Abra failed to disclose the risks associated with the Abra Earn program, including the risk of loss of principal and the risk of illiquidity. The agency also alleged that the company failed to provide customers with adequate information about the creditworthiness of the borrowers and the risks associated with lending to them.

Failure to Disclose Fees and Expenses

The SEC alleged that Abra failed to provide customers with adequate disclosures about the fees and expenses associated with the Abra Earn program. The agency alleged that the company failed to disclose the fees and expenses in a clear and concise manner, and that it failed to provide customers with adequate information about how the fees and expenses would be calculated and charged.

Conclusion

The Abra Earn program has been shut down, and the company is facing regulatory action from the SEC. The case serves as a reminder of the importance of proper disclosure and registration for investment companies. It also highlights the risks associated with lending to unregistered investment companies and the importance of doing thorough due diligence before investing in any program.

FAQs

Q: What is Abra Earn?

A: Abra Earn is a crypto investment program that allowed customers to lend their assets to the company, which would then use those assets to generate returns.

Q: What were the returns offered by Abra Earn?

A: Abra Earn promised high levels of returns, with some customers earning as much as 10% per annum.

Q: How much money was in the Abra Earn program?

A: At its peak, the Abra Earn program had approximately $600 million in assets under management. Of this amount, almost $500 million came from U.S. investors.

Q: What are the risks associated with Abra Earn?

A: The risks associated with Abra Earn include the risk of loss of principal and the risk of illiquidity. The company also failed to disclose the creditworthiness of the borrowers and the risks associated with lending to them.

Q: What is the SEC’s role in this case?

A: The SEC is the regulatory agency responsible for enforcing the securities laws in the United States. The agency filed a complaint against Abra, alleging that the company had failed to register as an investment company and had also failed to disclose material information to its customers.

Q: What is the outcome of the case?

A: The Abra Earn program has been shut down, and the company is facing regulatory action from the SEC. The case serves as a reminder of the importance of proper disclosure and registration for investment companies.