SEC v. Plutus Lending, LLC d/b/a Abra, No. 1:24-cv-02457, District of Columbia (Aug. 26, 2024) — Complaint

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE
COMMISSION,

  Plaintiff,

 vs.

Plutus Lending, LLC d/b/a Abra,

  Defendant.

CASE NO.  24-cv-2457

COMPLAINT

Plaintiff Securities and Exchange Commission (“SEC”) files this complaint
against Plutus Lending, LLC d/b/a Abra (“Defendant” or “Abra”).
SUMMARY
1. Abra violated the federal securities laws for years by (1) illegally
offering and selling securities without registering those offerings with the SEC,
and (2) underwriting its securities sales while operating as an unregistered
investment company.
2. Starting around July 2020 and continuing through approximately
June 2023, Abra offered and sold securities to U.S. retail investors through an
investment called “Abra Earn.” Investors in Abra Earn tendered various crypto
assets into Abra Earn accounts,  and in exchange, Abra promised to pay interest
on those assets. Abra Earn was offered and sold as a security and Abra’s offer
and sale of those securities,  without registering the offerings with the SEC,
violated Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”) [15
U.S.C. §§ 77e(a) and 77e(c)].

2

3. In addition, from at least December 2020 to December 2022, Abra
operated as an investment company as defined by the Investment Company Act
of 1940 (“Investment Company Act”). When a company (1) is organized or
otherwise created under the laws of the United States or of a State, (2) meets the
definition of an investment company under the Investment Company Act, and (3)
cannot rely on an exception or an exemption from registration, then generally
that company must register with the SEC under the Investment Company Act
and must register any public offering of its securities under the Securities Act.
Abra, which was not exempt from registration, never registered with the SEC as
an investment company and never registered the offering of any of its securities
with the SEC.
4. Moreover, when an unregistered investment company does not have
a board of directors, the Investment Company Act prohibits underwriters from
offering or selling securities issued by that investment company. Abra, which
lacked a board of directors, acted as an underwriter by offering and selling its
own securities,  Abra Earn, to the general public. In so doing, Abra violated
Section 7(b) of the Investment Company Act [15 U.S.C. § 80a–7(b)] by acting as
an underwriter selling securities of an unregistered investment company.
JURISDICTION AND VENUE
5. The SEC brings this action pursuant to the authority established in
Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 42(d) of the
Investment Company Act [15 U.S.C. § 80a–41(d)].

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6. This Court has jurisdiction over this action pursuant to Section
22(a) of the Securities Act [15 U.S.C. § 77v(a)] and Section 44   of the Investment
Company Act [15 U.S.C. § 80a–43].
7. Defendant, directly or indirectly, has   made use of the means or
instruments of transportation or communication in interstate commerce or of the
mails in connection with the transactions, acts, practices, and courses of
business alleged herein.
8. Venue is proper in this district pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)], because Abra Earn was offered within this
District, and Abra’s failures   to register with the SEC occurred within this
District.
DEFENDANT
9. Plutus Lending, LLC (“Abra”), is a Delaware limited liability
company formed in 2020 with its principal place of business in Atlanta, GA.
Defendant and its related entities provide various crypto asset-related financial
products and services while doing business under the name “Abra.” The name
Abra is used in this complaint to refer to Defendant Plutus Lending, LLC, unless
otherwise specified.
10. Two related entities operating under the Abra tradename, Plutus
Financial, Inc. and Plutus Technologies Philippines Corp., were subject to a prior
SEC order for unrelated violations of Section 5(e) of the Securities Act and
Section 6(l) of the Securities Exchange Act of 1934 for unregistered offers and
sales of security-based swaps.

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11. Plutus Lending, LLC was the entity which offered and sold
investments in the Abra Earn program, which qualify as securities under the
laws described in this complaint. Neither Plutus Lending, LLC nor its offerings
of   securities were ever registered with the SEC in any capacity.
STATUTORY AND REGULATORY FRAMEWORK
12. The Securities Act requires that, unless certain exemptions not at
issue in this case apply, anyone who offers or sells   securities to the investing
public in interstate commerce must register those offers and sales with the SEC.
This is required, in part, to ensure investors have sufficient, accurate
information to make informed decisions before they invest.
13. The definition of a “security” under Section 2(a)(1) of the Securities
Act includes a wide range of investment vehicles, including “investment
contracts.” 15 U.S.C. §77b(a)(1). An investment contract exists when there is the
investment of money in a common enterprise with a reasonable expectation of
profits to be derived from the efforts of others.
14. Sections 5(a) and 5(c) of the Securities Act, codified at 15 U.S.C.
§§ 77e(a) and 77e(c), require that an issuer of securities register the offer or sale
of securities with the SEC.  Registration statements provide investors with
important information about the securities, including the terms of the offering,
and the registrant’s business operations, financial condition, results of
operations, risk factors, and management. The Securities Act prohibits   persons
from engaging in the unregistered offer and sale of securities in interstate
commerce, unless an exemption from registration applies.

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15. The Investment Company Act regulates the structure and
operations of   investment companies. The Investment Company Act and
accompanying regulations are designed to minimize conflicts of interest that
arise in these complex operations. It also requires these companies to provide
various disclosures which provide information to the investing public about the
company and its investment objectives, as well as on investment company
structure and operations.
16. As relevant here, Section 3(a)(1)(C) of the Investment Company Act
defines “investment company” to include any issuer of securities that “is engaged
or proposes to engage in the business of investing, reinvesting, owning, holding,
or trading in securities, and owns or proposes to acquire investment securities
having a value exceeding 40 per centum of the value of such issuer’s total assets
(exclusive of Government securities and cash items) on an unconsolidated basis.”
15 U.S.C. § 80a–3(a)(1)(C). Section 3(a)(2) of the Investment Company Act
defines “investment securities” to include all securities except Government
securities, securities issued by employees’ securities companies, and securities
issued by majority-owned subsidiaries of the owner which are not investment
companies and not relying on exceptions set forth in Sections 3(c)(1) or 3(c)(7) of
the Investment Company Act. Id.
17. The Investment Company Act defines “underwriter” as “any person
who . . . sells for an issuer in connection with, the distribution of any security, or
participates or has a direct or indirect participation in any such undertaking . . . .”

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15 U.S.C. § 80a–2(a)(40). A company who offers and sells its own securities can
be both an issuer and its own underwriter.
18. Section 7(b) of the Investment Company Act makes it unlawful for
an underwriter to, among other things, directly or indirectly “offer for sale, sell,
or deliver after sale, by the use of the mails or any means or instrumentality of
interstate commerce, any security or any interest in a security” of an
unregistered investment company that lacks a board of directors, if the
underwriter has reason to believe such securities will be the subject of a public
offering.
FACTS
19. Starting around July 2020, Abra began offering an interest-bearing
investment, Abra Earn (sometimes also referred to as Abra Interest), to United
States-based investors, through its public website, https://www.abra.com/, and
through its mobile application, both of which were accessible at all relevant
times from within the United States.
20. To participate in Abra Earn accounts, investors used   Abra’s mobile
application to open an account with a third-party custodian and then tendered
certain crypto assets
1
 into the account in exchange for Abra’s promise to provide
periodic interest payments.

1
 The term “crypto asset” as used in this complaint refers to an asset that is issued
and transferred using distributed ledger or blockchain technology, including, but
not limited to, so-called “cryptocurrencies,” “coins,” and “tokens.”

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21. Abra engaged in interstate commerce and used the means and
instrumentalities of interstate commerce to offer and sell Abra Earn to U.S.
investors by, among other things, engaging in a public offering through its
mobile app, its website, and through social media.
22. Abra created a reasonable expectation that investors would earn
profits passively through Abra Earn, including through the conduct described
below.
23. On its website, Abra Earn was listed under the heading “INVEST.”
24. Abra’s social media accounts also touted Abra Earn as an
investment and a way to make money. For example, during the time period
when Abra sought investors for Abra Earn accounts, Abra’s Twitter account
posted: “Don’t rely on one source for your retirement. Have a variety of
investments like stocks, bonds and real estate. You should also consider using
Abra’s earn program to earn interest on your crypto.” Abra’s Twitter account
encouraged customers to buy crypto assets “on Abra” and keep “them in our
wallet for 8% ROI [return on investment]!” Abra’s LinkedIn profile contained the
tagline: “Cryptocurrency Investing. Simplified.” Abra’s Facebook account
highlighted “Abra Earn” as a way to grow crypto “auto-magically” by “[e]arn[ing]
some of the best rates around for your crypto” and highlighting that “interest is
compounded daily.”

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25. Abra routinely tweeted the current interest rates available on
various crypto assets from its official Twitter account and posted similar content
on other social media sites.
26. The screenshot below is one example of a tweet posted by Abra on
July 28, 2021, showing interest rates of between 4% and 8% that were the then-
available rates to investors who participated in the Abra Earn accounts.

27. In Abra’s Terms of Use, marketing materials, and explanations of
Abra Earn on Abra’s website, Abra informed investors how it used those assets
to generate returns and pay investors interest. The “Terms of Use – US
Persons,” which all U.S.-based Abra Earn users agreed to when opening an
account, contained the following: “We will lend, sell, pledge, rehypothecate,
2

2
 Rehypothecation is the re-use of collateral. In this case, Abra used borrowed crypto
assets to serve as collateral in other transactions.

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assign, invest, use, commingle, or otherwise dispose of funds and cryptocurrency
assets to counterparties, and we will use our commercial best efforts to prevent
losses.”
28. Abra Earn investors’ crypto assets were pooled into one central
reserve account that Abra controlled. Abra used investor assets tendered as part
of Abra Earn for Abra’s general use in its business, including for lending to
third-parties and other revenue-generating strategies. This activity generated
revenue for Abra, and Abra shared its revenues with its investors. Abra earned
revenue for itself through the pooled funds, so the investors’ and Abra’s fortunes
were linked.
29. Abra’s lending and investment activities were at its own discretion,
and Abra managed the risks involved with its deployment of the pooled funds.
Abra Earn investors were strictly passive and had no ability to manage how
their tendered assets were used.
30. The interest rates offered to investors were generally subject to
change on a daily basis, at Abra’s total discretion, and were often set based on
the supply and demand of crypto assets and Abra’s performance in various
revenue-generating strategies.
31. Historically, Abra offered interest rates on crypto assets ranging
between 2% and 14%. Investors began earning interest after holding funds in an
Abra Earn account for at least two full days. Interest accrued daily and was paid
out weekly.

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32. Investors were able to withdraw all or part of the crypto assets they
lent to Abra, including the interest earned, by making a withdrawal request on
the Abra app. Abra returned investors’ crypto assets from Abra Earn into their
non-interest-bearing Abra wallet within seven business days.
33. Abra did not guarantee that the assets invested in Abra Earn would
not lose value, and Abra disclosed the risk of loss to investors in its terms of
service.
34. As of December 2021, Abra Earn globally had at least 27,440 active
investors and at least $607 million in assets. Of these investors and assets, at
least 10,567 investors and at least $495 million in assets were from U.S. users.
35. Although Abra issued securities in the form of investment contracts
by publicly offering and selling Abra Earn, Abra has never had a registration
statement filed or in effect with the SEC for its offers and sales of Abra Earn.
Abra Earn did not qualify for any exemption to the SEC’s registration filing
requirements.
36. From at least December 2020 to December 2022, Abra was in the
business of investing in, owning, and holding investment securities whose value
exceeded 40% of the value of Abra’s total assets (exclusive of government
securities and cash items) on an unconsolidated basis, and thus was an
investment company pursuant to the Investment Company Act.

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37. From at least July 2020 to October 2022, Abra sold and distributed
several thousand Abra Earn accounts to the general public on its own behalf and
thus was also an underwriter pursuant to the Investment Company Act.
38. Abra never registered as an investment company, as required by
the Investment Company Act, and could not rely on any exception or exemption.
39. Around October 2022, Abra ceased offering Abra Earn to new
investors. Existing investors were able to retain their Abra Earn accounts and
Abra continued to pay variable interest to those investors through June 2023.
40. In June 2023, Abra began winding down the Abra Earn program
and told its U.S.-based Abra Earn customers to withdraw their crypto assets. By
July 25, 2023, “Abra Earn . . . [had] been completely wound down in the US.”
41. As of June 2024, nearly all U.S.-based investor assets in Abra Earn
had been returned, with assets valued at approximately $2.9 million remaining
on the Abra platform.
FIRST CLAIM FOR RELIEF
Violations of Section 5(a) and 5(c) of the Securities Act
[15 U.S.C. §§ 77e(a) and 77e(c)]
42. The SEC realleges and incorporates by reference all the foregoing
paragraphs.
43. Without a registration statement in effect as to Abra Earn,
Defendant, directly and indirectly, (a) made use of the means and instruments of
transportation or communications in interstate commerce or of the mails to sell
securities through the use or medium of any prospectus or otherwise; (b) carried
or caused to be carried through the mails or in interstate commerce, by any

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means or instruments of transportation, any such security for the purpose of sale
or for delivery after sale; and (c) made use of the means and instruments of
transportation or communication in interstate commerce or of the mails to offer
to sell through the use or medium of a prospectus or otherwise, securities as to
which no registration statement had been filed.
44. By engaging in the conduct described above, Defendant violated,
and unless restrained and enjoined will continue to violate, Sections 5(a) and 5(c)
of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].
SECOND CLAIM FOR RELIEF
Violations of Section 7(b) of the Investment Company Act
[15 U.S.C. § 80a–7(b)]
45. The SEC realleges and incorporates by reference all the foregoing
paragraphs.
46. From at least December 2020 to December 2022, Defendant
satisfied   the statutory definition of an investment company because it was an
issuer of securities engaged in the business of investing, reinvesting, owning,
holding, or trading in securities, and owned investment securities having a value
exceeding 40 per centum of the value of Defendant’s total assets (exclusive of
Government securities and cash items) on an unconsolidated basis.
47. Although it was required to register with the SEC as an investment
company, Abra did not and no exception to or exemption from the registration
requirement applies.
48. Abra issued securities in the form of its Abra Earn investment.

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49. Abra acted as its own underwriter by offering and selling the Abra
Earn product in a public distribution.
50. Abra violated Section 7(b) of the Investment Company Act, which
makes it unlawful for an underwriter of unregistered investment company that
does not have a board of directors to, among other things, directly or indirectly
“[o]ffer for sale, sell, or deliver after sale, by the use of the mails or any means or
instrumentality of interstate commerce, any security or any interest in a
security . . . ,” if the underwriter has reason to believe such securities will be the
subject of a public offering.
51. By engaging in the conduct described above, Defendant violated,
and unless restrained and enjoined will continue to violate, Section 7(b) of the
Investment Company Act.
Prayer for Relief
WHEREFORE, the SEC respectfully requests that the Court issue a Final
Judgment:
A. Finding that Defendant Abra committed the violations alleged above;
B. In a form consistent with Rule 65(d) of the Federal Rules of Civil
Procedure, permanently enjoining Abra, and its agents, servants,
employees, and attorneys, and those persons in active concert or
participation with Abra, who receive actual notice of the judgment by
personal service or otherwise, from violating Sections 5(a) and 5(c) of the
Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] and Section 7(b) of the
Investment Company Act [15 U.S.C. § 80a–7(b)];

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C. Ordering Defendant to pay civil penalties under Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 42(e) of the Investment
Company Act [15 U.S.C. § 80a-41(d)];
D. Retaining jurisdiction of this action in accordance with the principles of
equity and the Federal Rules of Civil Procedure to implement and carry
out the terms of all orders and decrees that may be entered, or to
entertain any suitable application or motion for additional relief within
the jurisdiction of this Court; and
E. Granting such other and further relief as this Court may determine to be
just and necessary.

DATED: August 26, 2024 Respectfully submitted,

SECURITIES AND EXCHANGE
COMMISSION

 By: Zachary A. Avallone
ZACHARY A. AVALLONE
        (Bar No. 1023361)
BRITTANY FRASSETTO
KEVIN HAYNE
Enforcement Division
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Telephone: (202) 795-0987
Facsimile: (202) 772-9282
Email: [email protected]

Attorneys for Plaintiff Securities and
Exchange Commission

UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA 

 
SECURITIES AND EXCHANGE 
COMMISSION, 
 
  Plaintiff, 
 
 vs. 
 
Plutus Lending, LLC d/b/a Abra, 
 
  Defendant. 

 
 
CASE NO. 24-cv-2457 
 
COMPLAINT 
 

 

  

 
Plaintiff Securities and Exchange Commission (“SEC”) files this complaint 

against Plutus Lending, LLC d/b/a Abra (“Defendant” or “Abra”). 

SUMMARY 

1. Abra violated the federal securities laws for years by (1) illegally 

offering and selling securities without registering those offerings with the SEC, 

and (2) underwriting its securities sales while operating as an unregistered 

investment company. 

2. Starting around July 2020 and continuing through approximately 

June 2023, Abra offered and sold securities to U.S. retail investors through an 

investment called “Abra Earn.” Investors in Abra Earn tendered various crypto 

assets into Abra Earn accounts, and in exchange, Abra promised to pay interest 

on those assets. Abra Earn was offered and sold as a security and Abra’s offer 

and sale of those securities, without registering the offerings with the SEC, 

violated Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”) [15 

U.S.C. §§ 77e(a) and 77e(c)].  

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3. In addition, from at least December 2020 to December 2022, Abra 

operated as an investment company as defined by the Investment Company Act 

of 1940 (“Investment Company Act”). When a company (1) is organized or 

otherwise created under the laws of the United States or of a State, (2) meets the 

definition of an investment company under the Investment Company Act, and (3) 

cannot rely on an exception or an exemption from registration, then generally 

that company must register with the SEC under the Investment Company Act 

and must register any public offering of its securities under the Securities Act. 

Abra, which was not exempt from registration, never registered with the SEC as 

an investment company and never registered the offering of any of its securities 

with the SEC. 

4. Moreover, when an unregistered investment company does not have 

a board of directors, the Investment Company Act prohibits underwriters from 

offering or selling securities issued by that investment company. Abra, which 

lacked a board of directors, acted as an underwriter by offering and selling its 

own securities, Abra Earn, to the general public. In so doing, Abra violated 

Section 7(b) of the Investment Company Act [15 U.S.C. § 80a–7(b)] by acting as 

an underwriter selling securities of an unregistered investment company. 

JURISDICTION AND VENUE 

5. The SEC brings this action pursuant to the authority established in 

Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 42(d) of the 

Investment Company Act [15 U.S.C. § 80a–41(d)]. 

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6. This Court has jurisdiction over this action pursuant to Section 

22(a) of the Securities Act [15 U.S.C. § 77v(a)] and Section 44 of the Investment 

Company Act [15 U.S.C. § 80a–43]. 

7. Defendant, directly or indirectly, has made use of the means or 

instruments of transportation or communication in interstate commerce or of the 

mails in connection with the transactions, acts, practices, and courses of 

business alleged herein.  

8. Venue is proper in this district pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)], because Abra Earn was offered within this 

District, and Abra’s failures to register with the SEC occurred within this 

District. 

DEFENDANT 

9. Plutus Lending, LLC (“Abra”), is a Delaware limited liability 

company formed in 2020 with its principal place of business in Atlanta, GA. 

Defendant and its related entities provide various crypto asset-related financial 

products and services while doing business under the name “Abra.” The name 

Abra is used in this complaint to refer to Defendant Plutus Lending, LLC, unless 

otherwise specified. 

10. Two related entities operating under the Abra tradename, Plutus 

Financial, Inc. and Plutus Technologies Philippines Corp., were subject to a prior 

SEC order for unrelated violations of Section 5(e) of the Securities Act and 

Section 6(l) of the Securities Exchange Act of 1934 for unregistered offers and 

sales of security-based swaps. 

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11. Plutus Lending, LLC was the entity which offered and sold 

investments in the Abra Earn program, which qualify as securities under the 

laws described in this complaint. Neither Plutus Lending, LLC nor its offerings 

of securities were ever registered with the SEC in any capacity.  

STATUTORY AND REGULATORY FRAMEWORK 

12. The Securities Act requires that, unless certain exemptions not at 

issue in this case apply, anyone who offers or sells securities to the investing 

public in interstate commerce must register those offers and sales with the SEC. 

This is required, in part, to ensure investors have sufficient, accurate 

information to make informed decisions before they invest. 

13. The definition of a “security” under Section 2(a)(1) of the Securities 

Act includes a wide range of investment vehicles, including “investment 

contracts.” 15 U.S.C. §77b(a)(1). An investment contract exists when there is the 

investment of money in a common enterprise with a reasonable expectation of 

profits to be derived from the efforts of others.  

14. Sections 5(a) and 5(c) of the Securities Act, codified at 15 U.S.C. 

§§ 77e(a) and 77e(c), require that an issuer of securities register the offer or sale 

of securities with the SEC. Registration statements provide investors with 

important information about the securities, including the terms of the offering, 

and the registrant’s business operations, financial condition, results of 

operations, risk factors, and management. The Securities Act prohibits persons 

from engaging in the unregistered offer and sale of securities in interstate 

commerce, unless an exemption from registration applies. 

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15. The Investment Company Act regulates the structure and 

operations of investment companies. The Investment Company Act and 

accompanying regulations are designed to minimize conflicts of interest that 

arise in these complex operations. It also requires these companies to provide 

various disclosures which provide information to the investing public about the 

company and its investment objectives, as well as on investment company 

structure and operations. 

16. As relevant here, Section 3(a)(1)(C) of the Investment Company Act 

defines “investment company” to include any issuer of securities that “is engaged 

or proposes to engage in the business of investing, reinvesting, owning, holding, 

or trading in securities, and owns or proposes to acquire investment securities 

having a value exceeding 40 per centum of the value of such issuer’s total assets 

(exclusive of Government securities and cash items) on an unconsolidated basis.” 

15 U.S.C. § 80a–3(a)(1)(C). Section 3(a)(2) of the Investment Company Act 

defines “investment securities” to include all securities except Government 

securities, securities issued by employees’ securities companies, and securities 

issued by majority-owned subsidiaries of the owner which are not investment 

companies and not relying on exceptions set forth in Sections 3(c)(1) or 3(c)(7) of 

the Investment Company Act. Id. 

17. The Investment Company Act defines “underwriter” as “any person 

who . . . sells for an issuer in connection with, the distribution of any security, or 

participates or has a direct or indirect participation in any such undertaking . . . .” 

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15 U.S.C. § 80a–2(a)(40). A company who offers and sells its own securities can 

be both an issuer and its own underwriter.  

18. Section 7(b) of the Investment Company Act makes it unlawful for 

an underwriter to, among other things, directly or indirectly “offer for sale, sell, 

or deliver after sale, by the use of the mails or any means or instrumentality of 

interstate commerce, any security or any interest in a security” of an 

unregistered investment company that lacks a board of directors, if the 

underwriter has reason to believe such securities will be the subject of a public 

offering. 

FACTS 

19. Starting around July 2020, Abra began offering an interest-bearing 

investment, Abra Earn (sometimes also referred to as Abra Interest), to United 

States-based investors, through its public website, https://www.abra.com/, and 

through its mobile application, both of which were accessible at all relevant 

times from within the United States. 

20. To participate in Abra Earn accounts, investors used Abra’s mobile 

application to open an account with a third-party custodian and then tendered 

certain crypto assets1 into the account in exchange for Abra’s promise to provide 

periodic interest payments.  

 
1 The term “crypto asset” as used in this complaint refers to an asset that is issued 
and transferred using distributed ledger or blockchain technology, including, but 
not limited to, so-called “cryptocurrencies,” “coins,” and “tokens.”  

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21. Abra engaged in interstate commerce and used the means and 

instrumentalities of interstate commerce to offer and sell Abra Earn to U.S. 

investors by, among other things, engaging in a public offering through its 

mobile app, its website, and through social media.  

22. Abra created a reasonable expectation that investors would earn 

profits passively through Abra Earn, including through the conduct described 

below. 

23. On its website, Abra Earn was listed under the heading “INVEST.”  

24. Abra’s social media accounts also touted Abra Earn as an 

investment and a way to make money. For example, during the time period 

when Abra sought investors for Abra Earn accounts, Abra’s Twitter account 

posted: “Don’t rely on one source for your retirement. Have a variety of 

investments like stocks, bonds and real estate. You should also consider using 

Abra’s earn program to earn interest on your crypto.” Abra’s Twitter account 

encouraged customers to buy crypto assets “on Abra” and keep “them in our 

wallet for 8% ROI [return on investment]!” Abra’s LinkedIn profile contained the 

tagline: “Cryptocurrency Investing. Simplified.” Abra’s Facebook account 

highlighted “Abra Earn” as a way to grow crypto “auto-magically” by “[e]arn[ing] 

some of the best rates around for your crypto” and highlighting that “interest is 

compounded daily.”  

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25. Abra routinely tweeted the current interest rates available on 

various crypto assets from its official Twitter account and posted similar content 

on other social media sites. 

26. The screenshot below is one example of a tweet posted by Abra on 

July 28, 2021, showing interest rates of between 4% and 8% that were the then-

available rates to investors who participated in the Abra Earn accounts. 

 

27. In Abra’s Terms of Use, marketing materials, and explanations of 

Abra Earn on Abra’s website, Abra informed investors how it used those assets 

to generate returns and pay investors interest. The “Terms of Use – US 

Persons,” which all U.S.-based Abra Earn users agreed to when opening an 

account, contained the following: “We will lend, sell, pledge, rehypothecate,2 

 
2 Rehypothecation is the re-use of collateral. In this case, Abra used borrowed crypto 
assets to serve as collateral in other transactions. 

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assign, invest, use, commingle, or otherwise dispose of funds and cryptocurrency 

assets to counterparties, and we will use our commercial best efforts to prevent 

losses.”  

28. Abra Earn investors’ crypto assets were pooled into one central 

reserve account that Abra controlled. Abra used investor assets tendered as part 

of Abra Earn for Abra’s general use in its business, including for lending to 

third-parties and other revenue-generating strategies. This activity generated 

revenue for Abra, and Abra shared its revenues with its investors. Abra earned 

revenue for itself through the pooled funds, so the investors’ and Abra’s fortunes 

were linked.  

29. Abra’s lending and investment activities were at its own discretion, 

and Abra managed the risks involved with its deployment of the pooled funds. 

Abra Earn investors were strictly passive and had no ability to manage how 

their tendered assets were used. 

30. The interest rates offered to investors were generally subject to 

change on a daily basis, at Abra’s total discretion, and were often set based on 

the supply and demand of crypto assets and Abra’s performance in various 

revenue-generating strategies.  

31. Historically, Abra offered interest rates on crypto assets ranging 

between 2% and 14%. Investors began earning interest after holding funds in an 

Abra Earn account for at least two full days. Interest accrued daily and was paid 

out weekly.  

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32. Investors were able to withdraw all or part of the crypto assets they 

lent to Abra, including the interest earned, by making a withdrawal request on 

the Abra app. Abra returned investors’ crypto assets from Abra Earn into their 

non-interest-bearing Abra wallet within seven business days. 

33. Abra did not guarantee that the assets invested in Abra Earn would 

not lose value, and Abra disclosed the risk of loss to investors in its terms of 

service.  

34. As of December 2021, Abra Earn globally had at least 27,440 active 

investors and at least $607 million in assets. Of these investors and assets, at 

least 10,567 investors and at least $495 million in assets were from U.S. users. 

35. Although Abra issued securities in the form of investment contracts 

by publicly offering and selling Abra Earn, Abra has never had a registration 

statement filed or in effect with the SEC for its offers and sales of Abra Earn. 

Abra Earn did not qualify for any exemption to the SEC’s registration filing 

requirements.   

36. From at least December 2020 to December 2022, Abra was in the 

business of investing in, owning, and holding investment securities whose value 

exceeded 40% of the value of Abra’s total assets (exclusive of government 

securities and cash items) on an unconsolidated basis, and thus was an 

investment company pursuant to the Investment Company Act. 

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37. From at least July 2020 to October 2022, Abra sold and distributed 

several thousand Abra Earn accounts to the general public on its own behalf and 

thus was also an underwriter pursuant to the Investment Company Act. 

38. Abra never registered as an investment company, as required by 

the Investment Company Act, and could not rely on any exception or exemption.  

39. Around October 2022, Abra ceased offering Abra Earn to new 

investors. Existing investors were able to retain their Abra Earn accounts and 

Abra continued to pay variable interest to those investors through June 2023.  

40. In June 2023, Abra began winding down the Abra Earn program 

and told its U.S.-based Abra Earn customers to withdraw their crypto assets. By 

July 25, 2023, “Abra Earn . . . [had] been completely wound down in the US.”  

41. As of June 2024, nearly all U.S.-based investor assets in Abra Earn 

had been returned, with assets valued at approximately $2.9 million remaining 

on the Abra platform. 

FIRST CLAIM FOR RELIEF 
Violations of Section 5(a) and 5(c) of the Securities Act  

[15 U.S.C. §§ 77e(a) and 77e(c)] 

42. The SEC realleges and incorporates by reference all the foregoing 

paragraphs. 

43. Without a registration statement in effect as to Abra Earn, 

Defendant, directly and indirectly, (a) made use of the means and instruments of 

transportation or communications in interstate commerce or of the mails to sell 

securities through the use or medium of any prospectus or otherwise; (b) carried 

or caused to be carried through the mails or in interstate commerce, by any 

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means or instruments of transportation, any such security for the purpose of sale 

or for delivery after sale; and (c) made use of the means and instruments of 

transportation or communication in interstate commerce or of the mails to offer 

to sell through the use or medium of a prospectus or otherwise, securities as to 

which no registration statement had been filed.  

44. By engaging in the conduct described above, Defendant violated, 

and unless restrained and enjoined will continue to violate, Sections 5(a) and 5(c) 

of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].  

SECOND CLAIM FOR RELIEF 
Violations of Section 7(b) of the Investment Company Act  

[15 U.S.C. § 80a–7(b)] 

45. The SEC realleges and incorporates by reference all the foregoing 

paragraphs. 

46. From at least December 2020 to December 2022, Defendant 

satisfied the statutory definition of an investment company because it was an 

issuer of securities engaged in the business of investing, reinvesting, owning, 

holding, or trading in securities, and owned investment securities having a value 

exceeding 40 per centum of the value of Defendant’s total assets (exclusive of 

Government securities and cash items) on an unconsolidated basis.  

47. Although it was required to register with the SEC as an investment 

company, Abra did not and no exception to or exemption from the registration 

requirement applies.  

48. Abra issued securities in the form of its Abra Earn investment. 

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49. Abra acted as its own underwriter by offering and selling the Abra 

Earn product in a public distribution. 

50. Abra violated Section 7(b) of the Investment Company Act, which 

makes it unlawful for an underwriter of unregistered investment company that 

does not have a board of directors to, among other things, directly or indirectly 

“[o]ffer for sale, sell, or deliver after sale, by the use of the mails or any means or 

instrumentality of interstate commerce, any security or any interest in a 

security . . . ,” if the underwriter has reason to believe such securities will be the 

subject of a public offering.  

51. By engaging in the conduct described above, Defendant violated, 

and unless restrained and enjoined will continue to violate, Section 7(b) of the 

Investment Company Act. 

Prayer for Relief 

WHEREFORE, the SEC respectfully requests that the Court issue a Final 

Judgment: 

A. Finding that Defendant Abra committed the violations alleged above; 

B. In a form consistent with Rule 65(d) of the Federal Rules of Civil 

Procedure, permanently enjoining Abra, and its agents, servants, 

employees, and attorneys, and those persons in active concert or 

participation with Abra, who receive actual notice of the judgment by 

personal service or otherwise, from violating Sections 5(a) and 5(c) of the 

Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] and Section 7(b) of the 

Investment Company Act [15 U.S.C. § 80a–7(b)]; 

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C. Ordering Defendant to pay civil penalties under Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 42(e) of the Investment 

Company Act [15 U.S.C. § 80a-41(d)]; 

D. Retaining jurisdiction of this action in accordance with the principles of 

equity and the Federal Rules of Civil Procedure to implement and carry 

out the terms of all orders and decrees that may be entered, or to 

entertain any suitable application or motion for additional relief within 

the jurisdiction of this Court; and 

E. Granting such other and further relief as this Court may determine to be 

just and necessary. 

 
DATED: August 26, 2024 Respectfully submitted, 

 
SECURITIES AND EXCHANGE 
COMMISSION 
 

 By: Zachary A. Avallone 
ZACHARY A. AVALLONE 
        (Bar No. 1023361) 
BRITTANY FRASSETTO 
KEVIN HAYNE 
Enforcement Division 
Securities and Exchange Commission 
100 F Street, NE 
Washington, DC 20549 
Telephone: (202) 795-0987 
Facsimile: (202) 772-9282 
Email: [email protected] 

 
Attorneys for Plaintiff Securities and 
Exchange Commission 
 

   

Case 1:24-cv-02457   Document 1   Filed 08/26/24   Page 14 of 14


	SUMMARY
	JURISDICTION AND VENUE
	DEFENDANT
	STATUTORY AND REGULATORY FRAMEWORK
	FACTS
	FIRST CLAIM FOR RELIEF
	SECOND CLAIM FOR RELIEF
	Prayer for Relief