February 23, 2024 - The Iowa Insurance Division entered a settlement in principle with a group of affiliated companies commonly known as Abra. The settlement addresses Abra’s alleged offer and sale of interest-bearing cryptocurrency depository products referred to as Abra Boost and Abra Earn.
As part of the settlement, Abra is required to notify all Iowa consumers with open Abra accounts containing crypto assets on or before February 28, 2024, that Abra is winding down U.S. operations and to encourage them to move any remaining crypto assets from Abra’s platform. Consumers will have seven (7) days from the notice date to remove their assets from the Abra platform.
Any assets owned by Iowa consumers that remain with Abra after March 6, 2024, will be converted to U.S. dollars and transferred to the Iowa Insurance Division Restitution Fund. Any Iowa consumers who do not remove their assets from the Abra platform within the 7-day notice period should contact the Iowa Insurance Division to recover the converted value of their assets.
The parties to the settlement include Plutus Financial Holdings Inc., Plutus Financial Inc., Plutus Lending LLC and Abra Boost LLC. These companies are controlled by William “Bill” Barhydt, who is also a party to the settlement. 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.
“Although firms are creating new products tied to evolving technologies, they must continue to comply with existing securities laws,” said Iowa Commissioner of Insurance Doug Ommen. “The Division will continue to ensure that investors purchasing securities tied to digital assets are afforded the same protections as investors purchasing stocks, bonds and other traditional products.”
Abra is presently winding down U.S. retail operations. Although clients have been able to withdraw their assets from Abra, cryptocurrencies valued at approximately $6,426.90 owned by approximately 39 residents of Iowa currently remain in its custody.
“The Iowa Insurance Division strongly encourages Abra clients residing in Iowa to withdraw their assets as soon as possible – but certainly within seven days of receiving notice from Abra,” said Ommen. “The Iowa Insurance Division stands ready to assist and answer any questions that may arise from consumers.”
As part of the settlement in principle, Abra and Mr. Barhydt will enter a Consent Order with the Iowa Insurance Division requiring that they cease and desist from offering or selling unregistered securities in Iowa and ordering them to pay an administrative penalty of $461,610.14, which will be suspended if they comply with the process to return all assets owned by Iowa consumers. The entry of this order is contingent upon Abra successfully fulfilling the requirements outlined above to ensure Iowa consumers have access to their assets or the converted value of their assets. Abra has until March 6, 2024, to complete its obligations.
If Iowa Abra investors have any questions regarding the settlement, they should contact:
Brooke Hohn
Enforcement Paralegal
Iowa Insurance Division
(515) 654-6561
enforcement@iid.iowa.gov