Joint Hunt! Cryptocurrency wallet "Abra" accused by SEC, CFTC of selling off-exchange trading contracts

According to a document released by the U.S. Securities and Exchange Commission (SEC), the cryptocurrency wallet Abra has reached a settlement with the Commodity Futures Trading Commission (CFTC) and SEC for selling off-exchange swaps to retail investors without registration and conducting related transactions in unregistered countries.

Favorable New Ventures Backed by Foxconn

Established in 2014, Abra is an early cryptocurrency wallet. During the ICO boom in 2017, Abra caught the attention of the Foxconn Group and secured a $16 million Series B funding led by Foxconn, bringing Abra's strategic funding to over $30 million. Previous participants in the funding round included institutions like American Express and Jungle Ventures.

At the time, this marked Foxconn's first investment in a bitcoin startup. Jack Lee, partner at Foxconn's subsidiary HCM Capital, stated, "We believe Abra can usher in a 'financial inclusion' era through solutions like credit services."

SEC Statement

The SEC pointed out that through the services provided by the Abra App and Plutus, users could speculate on the price fluctuations of U.S. stock securities and engage in blockchain-based financial transactions. As a result, companies involved in the settlement include Abra and Plutus Financial Inc., who will collectively pay a fine of $300,000.

It is understood that Abra started offering contracts to U.S. and overseas investors in February of last year, but Abra did not take any measures to determine whether users downloading the app were "accredited investors" as defined by securities laws. Despite Abra's attempt last year to restrict services to non-U.S. users and move certain operations overseas, it was found that its California-based employees designed derivative contracts and conducted related marketing activities.

CFTC: Violations of Illegal Off-Exchange Trading and Registration

The CFTC's statement indicated that Abra and Plutus traded thousands of swap contracts through their mobile apps, forming swap agreements under the Commodity Exchange Act (CEA). Users could engage in financial transactions with counterparties, offering digital assets and foreign currencies for illegal off-exchange swaps to U.S. and overseas users, thereby violating registration requirements.

CFTC Enforcement Director James McDonald stated: Emphasizing once again in this case, the Commission will continue to collaborate with our regulatory partners to ensure market integrity, including those involving digital assets.