Texas Securities Board Issues Emergency Cease and Desist Order to Abra and CEO, William Barhydt

The Texas State Securities Board has taken decisive action against Abra by issuing an Emergency Cease and Desist Order. The order, also directed at Abra’s CEO, William (Bill) Barhydt, alleges securities fraud and misleading statements in connection with Abra’s digital asset depository accounts. This development comes as part of an ongoing investigation conducted by a working group of state securities regulators.

Abra, operating under various entities, including Plutus Financial, Inc. dba Abra, Plutus Lending, LLC dba Abra, and Abra Boost, LLC, is accused of selling investments in Abra Earn, a digital asset depository account, to both accredited and unaccredited investors across the United States. The Enforcement Division of the Texas State Securities Board has presented evidence suggesting fraudulent activities by Abra and its affiliates.

Under the Emergency Cease and Desist Order, Abra and its subsidiaries are required to halt their alleged fraudulent practices immediately. The order highlights Abra’s principal addresses in Delaware and California, signaling the board’s intention to ensure compliance across state lines.

The allegations made by the Texas State Securities Board raise concerns about the integrity of Abra’s investment offerings. The working group of state securities regulators leading the investigation believes that Abra made materially misleading statements and engaged in securities fraud, potentially deceiving investors. The board’s action aims to protect the public and prevent further harm.

Furthermore, the order emphasizes the financial instability of Abra, suggesting that the company is either insolvent or on the verge of insolvency. This revelation adds urgency to the case, prompting the Texas State Securities Board to take immediate action.

Abra’s CEO, William (Bill) Barhydt, is also a subject of the investigation. The board has served Barhydt with the Emergency Cease and Desist Order at various addresses, including Abra’s principal locations and Barhydt’s personal address in California.

The Securities Commissioner has requested a hearing on the matter, and the State Office of Administrative Hearings will consider the evidence presented by the Enforcement Division. The proposed relief includes cease and desist orders, refunds of principal to investors, and administrative fines against Abra, its subsidiaries, and Barhydt.

It is important to note that the Emergency Cease and Desist Order does not prevent Abra and its entities from returning assets to investors. The board’s primary concern is the protection of investors and ensuring fair treatment for those who have invested in Abra’s Earn and Boost accounts.


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Former CTO of Square and Creator of Cash App Dies in San Francisco Stabbing

Bob Lee, the former chief technology officer of Square and creator of Cash App, died on April 4, 2023, following a stabbing in San Francisco. Lee was a prominent figure in the tech industry, having contributed significantly to the development of Square and Cash App, two popular payment processing platforms. Lee’s death has come as a shock to the tech community, with many expressing their condolences on social media.

Bill Barhydt, the CEO of Abra, a leading crypto wallet company, confirmed Lee’s death on Twitter on April 5. Barhydt shared a report from a local media outlet that reported on Lee’s death but did not name him. However, Barhydt confirmed that it was indeed Bob Lee who had passed away. Barhydt expressed his grief and described Lee as a “brilliant mind” who had made significant contributions to the tech industry.

Jack Dorsey, the co-founder and CEO of Twitter, also expressed his condolences on the decentralized social media platform Nostr. Dorsey confirmed the news of Lee’s death and described it as “heartbreaking.” Many in the tech community have expressed their shock and sadness at the news of Lee’s untimely passing.

Lee’s contributions to the tech industry are significant, having played a pivotal role in the development of Square and Cash App. Square is a payment processing platform that allows small businesses to accept credit card payments. Cash App, on the other hand, is a mobile payment service that allows users to send and receive money. Lee was the chief technology officer of Square from 2009 to 2013 and is credited with playing a significant role in the company’s success.

Lee’s death has raised concerns about the safety of tech workers in San Francisco. The city has been grappling with rising crime rates, including a spate of violent incidents in recent months. Lee’s death is a tragic reminder of the need for increased security measures to protect the tech community.

In conclusion, Bob Lee’s passing is a significant loss to the tech industry. He was a talented and innovative individual who made significant contributions to the development of Square and Cash App. His untimely death is a reminder of the need for increased security measures to protect tech workers in San Francisco and other cities. The tech community will undoubtedly mourn his passing and remember his legacy.


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Hong Kong’s OSL and US-Based Abra Become the Latest Crypto Firms to Announce Layoffs

Abra, a California-based crypto trading and lending platform, and OSL, a licensed crypto exchange based in Hong Kong, are the latest in a string of crypto start-ups that have announced layoffs following the ongoing market turbulence.

Abra laid off 12 of its employees this week, and two sources familiar with the knowledge disclosed the matter.

Bill Barhydt, Abra CEO, confirmed the job cuts, stating that the company has cut 12 jobs purely as part of its cost-saving measures. The executive stated that layoffs translated to 5% of the workforce.

Barhydt said although Abra has trimmed certain jobs, the firm is still planning to hire more talents to fill various roles. While he did not mention specific job functions, he stated that an estimated 10 positions are currently open.

Meanwhile, Hong Kong-based digital asset trading platform, OSL, has slashed between 40 and 60 jobs, which is about 15% of its workforce, two individuals familiar with the source disclosed the development. The crypto exchange announced the job cuts on Wednesdays.

An OSL spokesperson confirmed the incident and said: “OSL has made the difficult decision to reduce headcount. This decision was not made lightly, and we understand the impact that this may have on employees.”

The OSL spokesperson further said the firm has adjusted its business model to renew its focus on SaaS and professional and institutional counterparts.

The spokesperson clarified that OSL made the layoffs not because it had any exposure to troubled crypto firms or tokens, including TerraUSD (UST) and staked ether (stETH).

“It is important to note that OSL has not had any exposure to stETH, luna or UST. Nor have we had exposure to any of the firms reportedly facing solvency issues,” the spokesperson said.

Abra and OSL have therefore joined several crypto firms that recently announced massive layoffs. Many crypto companies have laid off thousands of employees and frozen hiring amid challenging times for crypto and equity markets.

Last month saw more than 1,700 crypto job cuts in the crypto industry. Major crypto companies such as Gemini, Coinbase, Crypto.com, BlockFi, Mexico-based Bitso, Argentina’s Buenbit, and others, trimmed their workforces in June.

Image source: Shutterstock


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Propy Partners with Crypto Lending Platform Abra, Launching Crypto-backed Real Estate Loans

Blockchain-based real estate transaction management company Propy has partnered with digital asset wealth management platform Abra to open up a path to obtain real estate loans with digital assets as collateral.

Propy said that real estate buyers can use Abra Borrow to use their cryptocurrency for mortgage loans flexibly and said that repayment terms are very flexible and offer options as low as 0% to borrow dollars.

It’s an ‘All-In-One’ property transaction solution offering a unified transaction management process.

The CEO of Propy is Natalia Karayaneva, a real estate professional.

He emphasized the importance of finding a partner who can provide highly reliable crypto collateral for being the first company to process real estate transactions as NFTs.

He said about the collaboration:

“Abra’s impressive borrowing platform, proven track record, and customer-first mindset make it a natural fit as a partner. We look forward to working with the Abra team to expand financing options for the real estate ecosystem.”

The popularity of cryptocurrencies has led many real estate developers to accept cryptocurrencies as a means of payment.

Yesterday, Damac Properties, a major real estate development company based in Dubai, United Arab Emirates (UAE), announced Wednesday that it would sell properties using Bitcoin and Ethereum as payment methods.

Image source: Shutterstock


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Abra Appoints Justin McMahan As Chief Financial Officer

Abra, a rapidly rising crypto wealth management platform based in San Francisco, announced on Wednesday the appointment of Justin McMahan as the company’s first-ever Chief Financial Officer, effective immediately.

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McMahan’s appointment comes during a period of rapid growth for Abra. In the new role, McMahan will be tasked with optimizing the company’s financial performance, ensuring compliance with global accounting standards and helping direct Abra’s growth strategy in the forthcoming years.

McMahan joins Abra from Tower Research Capital, a high-frequency trading company, where he served as Managing Director and Global Treasurer.

McMahan is a veteran finance executive with more than 20 years of experience in trading, fintech, capital markets, wealth management, and asset management. Most recently, he served senior roles at Tower Research Capital.

Before working at Tower Research, McMahan was a Managing Director and Head of Operations of Treasury & Client Services at Serengeti Asset Management, an investment management company. Prior to joining Serengeti, he worked at Morgan Stanley for 13 years, where he held several roles, including Executive Director of Prime Brokerage Capital Introductions & Risk.

Bill Barhydt, the founder and Chief Executive Officer of Abra, talked about the development and said: “Justin is an exceptional addition to the firm as we continue to build out and differentiate our team with accomplished professionals across digital assets, traditional finance, and wealth management. Justin’s proven track record in executing transformational financial services solutions and leading businesses through dynamic stages of their evolution will be instrumental as we expand our platform and democratize access to the crypto economy.”

Meanwhile, McMahan also commented about his appointment: “Abra has cemented itself as a dominant player in this disruptive space, and I am humbled to join this extremely talented team that provides customers with truly unique access to cryptocurrency markets.”

Enabling Customers’ Access to Digital Assets

Abra was founded in 2015, by Bill Barhydt, a former fixed-income analyst for investment bank Goldman Sachs and former director of Netscape Communications Corporation.

Abra operates a crypto wallet with a built-in crypto swap service, a cryptocurrency lending service, and a crypto staking and high yield savings service. The firm claims to serve more than 1 million users with over $1.5 billion in assets under management.

In March 2018, Abra added support for 20 new cryptocurrencies including Litecoin, Bitcoin Cash, and Stellar into its platform.

In September last year, as reported by Blockchain.News, Abra raised $55 million in a Series C funding led by the Stellar Development Foundation, including other investors such as GNIA, Blockchain Capital, Kingsway Capital, Tiga Investment, among others.

Abra used the funds to expand its new offerings (which include wealth management, trading, and payments) with Stellar as a blockchain back-end and democratize access to them for new customers in developing nations.

Since 2020, Abra has witnessed “tremendous” growth. The firm recorded a ten-fold increase in revenues.

Image source: Shutterstock


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Federal judge’s decision could be a blow for the privacy rights of crypto users

A federal judge has implied that an individual may not have the right to force the Internal Revenue Service, or IRS, to expunge financial records it obtains from crypto exchanges.

In granting a motion to dismiss filed in December, Judge Joseph DiClerico in the District of New Hampshire suggested the Internal Revenue Service has no obligation to honor requests to purge crypto transaction records it received from Coinbase or other exchanges regarding information for federal taxes. Dismissed in part for lack of jurisdiction, the civil rights case filed by plaintiff James Harper against IRS commissioner Charles Rettig, the agency, and its officers concluded after almost a year in court.

Today’s dismissal said that Harper was not entitled to compensation for damages, or to limit the IRS’ ability to obtain tax information from the exchanges, mainly due to the Anti-Injunction Act. Only applicable to federal taxes, the statute prevents federal courts from exercising jurisdiction in certain cases to hinder “the assessment or collection of any tax.”

“The effect of Harper’s requested declaratory and injunctive relief would be to prevent the IRS from assessing Harper’s or others’ taxes using the information it has obtained through the John Doe third-party process,” said Judge DiClerico. “Consequently, his suit, to the extent it seeks injunctive and declaratory relief, is barred by the Anti-Injunction Act.”

Harper had an account at Coinbase starting in 2013, first receiving Bitcoin (BTC) deposits as income for consulting work. He claims that he declared the crypto transactions under capital gains on his tax returns until 2016, when he had liquidated and transferred any holdings off the exchange, as well as any BTC on Abra and Uphold.

In 2019, the IRS sent 10,000 letters to crypto investors clarifying the tax filing requirements for digital assets and seemingly suggesting they pay any undeclared back taxes. The letter included a veiled threat of crypto users being “subject to future civil and criminal enforcement activity” should they not properly declare and pay taxes on holdings.

Harper had reportedly not held any crypto on Coinbase since 2016, and the exchange said in its terms of agreement that it would protect users’ personal information from “loss, misuse, unauthorized access, disclosure, alteration, and destruction.” However, because he had received the IRS letter, Harper inferred that either Abra or Coinbase — or both — had provided his personal information to the agency. In July 2020, he filed a civil rights lawsuit against the IRS, alleging the tax agency violated his Fourth and Fifth Amendment rights.

Court documents referenced a federal case with Coinbase from 2017, which said the IRS obtaining personal financial information from the exchange was classified as “tax compliance, not research” that “serves the legitimate investigative purpose of enforcing the tax laws against those who profit from trading in virtual currency.” That decision, as well as the one today, may suggest that crypto users have little recourse should an exchange like Coinbase turn over their personal information in response to a subpoena or request for information from the IRS.

The judge’s decision comes just three weeks prior to the deadline for filing taxes in the United States, April 15.