SEC and CFTC Fine Crypto Investment App for Offering Synthetic Assets
The Securities and Exchange Commission and Commodity Futures Trading Commission issued a joint fine to Abra, a crypto portfolio app that let users get synthetic exposure to traditional markets. According to the SEC’s release, Abra effectively offered “security-based swaps” to retail investors without the proper registration, in addition to “failing to transact those swaps on a registered national exchange.”.
Abra offered a type of “centralized” synthetic asset, where users were able to get exposure to traditional securities like stocks by putting up Bitcoin (BTC) and Litecoin (LTC) as collateral. Despite moving part of the operations to the Philippines, Abra employees in California designed, marketed and hedged the contracts while also screening the users who were allowed in.
