Four banking entities under the control of a co-founder of a new type of digital cash payments app and crypto currency network recently signed a consent order with Connecticut Banking Commissioner Jorge Lopez. That order calls for Plutus Financial Holdings Inc., Plutus Financial Inc., Plutus Lending LLC, Abra Boost LLC and William Barhydt to pay back about $100,000 in investments made by 93 state investors.
Barhydt, co-founder and CEO of digital smartphone cash payments app Abra, was also directed to pay the state a $100,000 fine for violating Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered securities to the public.
Payment of the fine, however, would be suspended as long as respondents returned customer assets in accordance with the consent order, according to the banking department.
On Feb. 13, the Banking Commissioner entered a consent order after a multistate investigation into the securities activities of the respondents. More specifically, the multi-state investigation focused on the companies’ offer and sale of interest-bearing depository account products, referred to as “Abra Earn” and “Abra Boost.” Members of the public purchased the investments through a smartphone application.
Respondents began winding down their U.S. retail operations on or about June 14, 2023, and converted all Abra Earn and Abra Boost accounts to Abra Trade accounts, according to a banking department press release. Immediately upon conversion to Abra Trade, customers obtained title to their assets and a yield was no longer generated. Since June 14, 2023, the companies have repeatedly notified affected customers requesting them to withdraw their assets from their Abra Trade accounts.
The Consent Order required that the Respondents return all outstanding assets in Connecticut customer accounts having a value of $10 or more no later than the date the consent order was entered by the commissioner.
The Connecticut investors, whose accounts totaled approximately $98,609, were eligible for a monetary return. Approximately $92,838 has been paid out to those Connecticut investors so far.
In addition to the fine, the consent order directed the respondents to cease and desist from regulatory violations.
