Abra Earn, the crypto firm’s lending product, is at the heart of the agency’s complaint.
The cryptocurrency company allegedly began providing this service in July 2020.
The newest crackdown by the US SEC involves charges against the crypto business Abra for providing consumers with unregistered digital asset services. According to a recent press statement from the US Securities and Exchange Commission, Plutus Lending LLC, also known as Abra, has been charged for providing cryptocurrency solutions without first registering with the agency.
“Abra Earn,” the crypto firm’s lending product, is at the heart of the agency’s complaint, according to the US SEC press release. The lending product gave American investors a way to earn money while lending the company their cryptocurrency holdings.
Targeting Lending Product
The cryptocurrency company allegedly began providing this service in July 2020 without first registering with the relevant regulatory authority. Traders in the United States contributed around $500 million to the total $600 million in assets handled by the lending product at its height.
Traders were allegedly led to believe that the program could “auto-magically” generate interest, according to the agency’s claims. However, the company has allegedly made a profit off of the investors’ cryptocurrency holdings.
Furthermore, the government has leveled further allegations that the cryptocurrency business marketed securities without being exempt from SEC registration. Additionally, for more than two years, the defendant was allegedly an unregistered investment business.
According to the report, the crypto company lended crypto assets to institutional borrowers and invested over 40% of its total assets in investment securities during this period. The US SEC has shown its will to regulate the cryptocurrency business and give “protection to investors” by taking this latest enforcement action.
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