Crypto firm Abra has reached a settlement with 25 state financial regulators over allegations of operating without proper licensing for its mobile app. The settlement involves significant repercussions for Abra, including halting operations related to buying, selling, and trading crypto for U.S. Abra Trade customers. As part of the agreement, Abra is obliged to return $82 million in virtual assets to affected customers, according to a statement by the Conference of State Bank Supervisors (CSBS), which represents regulators from 50 states and U.S. territories overseeing a vast majority of U.S. banks.

The investigation and subsequent settlement were spearheaded by state financial regulators from Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, Vermont, and Washington State. These regulators found that Abra had been operating its mobile application for crypto transactions without obtaining the necessary licenses, as required by state laws. The CSBS emphasized that such actions undermine consumer protection efforts and violate state regulatory frameworks designed to safeguard financial activities.

Charlie Clark, Director of the Washington State Department of Financial Institutions and Chair of the CSBS, underscored the seriousness of the regulators' role in ensuring compliance with state laws. He stated that companies failing to adhere to these laws will face accountability measures to uphold consumer protection and maintain regulatory integrity.

As part of the settlement, the states involved have agreed to waive the usual $250,000 penalty per jurisdiction, opting instead to allocate these funds towards reimbursing affected customers. This decision aims to facilitate the return of virtual assets to impacted users in a timely manner, mitigating financial losses resulting from Abra's unlicensed operations.

Abra, led by CEO William Barhydt, has previously faced regulatory scrutiny, particularly highlighted by a settlement earlier this year with the Texas State Securities Board. This settlement addressed allegations of securities fraud related to Abra's Earn and Boost programs, marking a broader regulatory challenge for the company and its affiliates.

In response to the settlement, an Abra spokesperson expressed satisfaction with reaching a Term Sheet agreement with the Money Transmitters Regulators Association, effectively resolving all state matters related to the Abra App in the U.S. from March 2021 to June 2023. The spokesperson also clarified that Abra continues to operate within the U.S. under regulatory compliance through Abra Capital Management, a Securities and Exchange Commission (SEC)-registered investment adviser. This entity allows customers to engage in crypto investments, earn yields, stake assets, and borrow funds within the confines of applicable regulatory frameworks.

Despite regulatory challenges and adjustments in service offerings due to legal uncertainties, Abra remains committed to operating under compliant structures, ensuring ongoing service continuity and regulatory adherence in its crypto investment and financial products offerings within the United States.