Victor Ugochukwu · Dec 14, 2020 . 5min read
SEC Fines Blockchain firm Abra, $150,000 Fine
It accuses Abra and its related firm Plutus technologies, of selling unregistered securities to investors.
By Victor Ugochukwu · Jul 13, 2020 . 6min read
United States Financial watchdog SEC, fines another blockchain based firm Abra together with Plutus technologies issuing a cease and desist order plus fine of $150,000 combined.
In a recent press release dated 13th July 2020, it outlines the charge against both firms. It accuses Abra and its related firm Plutus technologies, of selling unregistered securities to investors. These investors were not even accredited investors it claims.
SEC in its charge claims Abra intentionally advised its retail users to choose unregistered securities it offers on its app. Abra assured them the value of their contract would go up or down just the same way the price of the underlying security behaved on US stock exchanges. This it claims is a contravention of U.S. security laws.
Abra is a California based blockchain firm with relations to Plutus technology, based in the Philippines. It’s customers were based both within U.S. and abroad. According to the report, disregarded performing due diligence on its customers to know if they were “eligible contract participants”.
The report further shows a SEC official contacted Abra by February informing her of her violations. This necessitated Abra’s barring of U.S. citizens from further participating in its platform. However, the damage had already been done which SEC as a regulator never turns a blind eye to. SEC therefore slams Abra with fine.
Daniel Michael, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit. said:
“Businesses cannot ignore the registration requirements designed to provide investors with the information necessary to evaluate securities transactions. Further, businesses that structure and effect security-based swaps may not evade the federal securities laws merely by transacting primarily with non-U.S. retail investors and setting up a foreign entity to act as a counterparty, while conducting crucial parts of their business in the United States.”
SEC never stops bringing erring Crypto and Blockchain firms to book
SEC as a body does not shy away from dropping the hammer on erring platforms many of which are now counting in their dozens within the blockchain and cryptocurrency industry. In a similar move, in 2018, it fined Etherdelta’s founder, a foremost decentralized exchange which allowed the trading of ERC20 tokens a sum of $400,000 for allowing users trade unregistered securities. Many in crypto sees SEC’s actions as overreaching innovation stifling. An example is the anti-encryption bill the U.S. Senate which empowers SEC as a lawamaking body seeks to pass to law.
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