CoinDesk reports:
Abra reaches settlement with US state regulators over unlicensed operations. Gemini’s Earn program settles with regulators to guarantee $1.1 billion for users amid regulatory challenges.
In a recent turnaround, Abra has reached a settlement with financial regulators from 25 US states over allegations of operating without proper licenses.
Notably, the action is directed not only at Abra but also its subsidiaries and CEO William Barhydt.
Terms of the settlement
The Conference of State Bank Supervisors (CSBS) stated in a press release, “Once the remaining virtual assets are returned according to the terms of the settlement, up to $82.1 million will be returned to consumers.”
This highlights the increasing illegal activities and the efforts made by US jurisdictions in consumer protection.
Charlie Clark, Chairman of CSBS and Director of the Washington State Department of Financial Institutions, expressed appreciation for the efforts of US jurisdictions in a press release, “State financial regulators are serious about protecting consumers and preventing unlicensed activity. Companies operating outside of state law will be held accountable.”
Investigation details
In terms of background, this investigation was conducted by state financial regulators from several states, including Arkansas, Connecticut, Georgia, Ohio, Oregon, Texas, Vermont, and Washington.
During the investigation, regulators found that Abra was offering cryptocurrency-related services through its mobile app without the necessary licenses.
It is worth noting that as early as June 15, 2023, Abra agreed to stop accepting virtual asset deposits from US customers and to cease providing cryptocurrency buying and trading services to US customers.
Additionally, Abra was required to return any remaining virtual assets held for participating states’ US customers.
A spokesperson for Abra stated in a release, “Abra is pleased to have negotiated a terms list with a working group of the Money Transmitter Regulators Association regarding the Abra app previously offered in the United States.”
Gemini also exploited the same loophole
Needless to say, this is not the first time such an incident has occurred.
In fact, the New York State Department of Financial Services (DFS) recently announced that Gemini, in partnership with Genesis and other creditors, operated outside of DFS regulation.
Following this, Genesis reached a settlement with DFS, where the Earn program users were guaranteed “100% return of digital asset in kind,” totaling approximately $1.1 billion.
As the US increasingly adopts digital asset regulation, such cases emphasize the importance of compliance with regulatory frameworks to maintain trust and stability in the financial ecosystem.