The Texas State Securities Board (TSSB) has taken legal action against Abra and its CEO, William John “Bill” Barhydt, alleging securities fraud and deceptive practices. Investors who participated in Abra Earn and Abra Boost have accused the defendants of engaging in these fraudulent activities.
According to the TSSB, the defendants deliberately concealed important financial information, such as party capitalization, loan defaults, and asset transfers to Binance. The companies were reported to be on the verge of bankruptcy or already insolvent by March 31, 2023.
In response to the alleged misconduct, the TSSB Enforcement Division has issued an Emergency Cease and Desist Order and a Notice of Hearing. The respondents are accused of selling Abra Earn to both accredited and unaccredited investors, and Abra Boost exclusively to accredited investors. Investors who participated in these programs reportedly transferred their digital assets to interest-bearing accounts with potential interest rates of up to 10%.
Complaints filed with the TSSB Enforcement Division reveal that the defendants were warned about their actions, but sales of Abra Earn continued until at least October 2022. During the same period, the defendants focused on promoting Abra Boost, taking advantage of Regulation D, Rule 506, to bypass investor protection measures.
The enforcement proceedings further claim that the defendants withheld crucial information from Abra Boost shareholders, including party capitalization, operating history, and defaults on loans secured by investors’ assets. Despite the companies’ insolvency or near-insolvency as of March 31, 2023, an official social media platform associated with the holding company asserted on June 11, 2023, that “Abra is not bankrupt.”