The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on Monday announced two fines of $ 150,000 each against the Abra platform. The regulators decided that the company offered unauthorized activities with bitcoin for the acquisition of cryptocurrency derivatives.
In filing with the SEC, the agency stated that both California-based Abra and a Philippine subsidiary identified as Plutus Technologies were conducting financial swaps or swaps. The business was based on traditional securities with retail investors, without registration and without performance in a nationally registered exchange.
This is an Abra service where operators would have used bitcoin (BTC) or litecoin (LTC) as a guarantee, for example to invest in the price movement of equity-related securities listed in the United States.
With the help of the application, individuals could enter into agreements that provide synthetic exposure to movements in the price of shares and ETFs in the United States. (This) through blockchain-based financial transactions with Abra or with related companies Plutus Technologies.
The SEC noted in the press release.
The SEC also accused Abra of failure to establish participation by eligible investors and not dealers. At that point, Marco Santori, from the legal department of the Kraken exchange house, explained that Abra was only allowed to offer the service to a certain group of operators, “that is, rich people with companies,”
The regulator mentioned that Abra started offering these types of services in February last year in the US and abroad, but temporarily stopped marketing the same month after talking to Commission officials.
The company resumed its service in May but limited its offering to non-Americans in an attempt to comply with the regulation and to move some of its operations abroad. However, the SEC claimed that the contracts were designed and marketed by its employees in California.
As for the CFTC, the Director of the Regulatory Division, James McDonald, stated that eliminating “misunderstandings is necessary to promote the responsible development of these innovative financial products.” Abra and its subsidiaries agreed to pay the fine without denying or accepting the facts and to cease marketing.
As for what happened to Abra, it should be mentioned that a similar service began to offer the Uphold platform in Latin America. Users can buy shares in US companies such as Amazon or Apple with bitcoin.
CryptoNews reported in July last year that Abra had limited its service in the United States amid “legislative uncertainty and restrictions.” The company then indicated that it had to make changes to its synthetic assets based on smart contracts. In this case, the synthetic asset was to offer users exposure to cryptocurrencies without, for example, owning bitcoin.
Abra is a platform that integrates a multi-currency wallet and an exchange house where the user can make cryptocurrency exchanges for fiat currencies. This CryptoNews tutorial shows you how to sign up and start trading bitcoin and cryptocurrencies in general.