The SEC (Securities and Exchange Commission) has fined the company behind the Abra application for allowing them to sell securities to all their users without KYC.
In particular, the application allowed users to bet on American securities, all through ETFs (Exchange Traded Funds) that reflected their trend using blockchain technology.
The story dates back to last year when Abra had launched Bitcoin ETFs and had already suffered a first interruption by the SEC since at the beginning the application allowed all users to access them.
Later a block was imposed on the platform preventing access to users in the US, but this was not sufficient since the operations were carried out on American territory, in California.
The various activities conducted by Abra could certainly not continue in violation of current regulations, as stated by the director of the SEC of the Enforcement Division’s Complex Financial Instruments Unit Daniel Michael:
“Businesses cannot ignore the registration requirements designed to provide investors with the information necessary to evaluate securities transactions. Further, businesses that structure and effect security-based swaps may not evade the federal securities laws merely by transacting primarily with non-U.S. retail investors and setting up a foreign entity to act as a counterparty, while conducting crucial parts of their business in the United States”.
As a result of the illegal behaviour, the parties agreed to a penalty of $150,000. In addition, the same fine was imposed by the Commodity Futures Trading Commission (CFTC), for a total of $300,000.
The violation of these laws operating on US territory constitutes a significant test case for all those companies and products that deal with instruments of this magnitude.
Let’s not forget that the power of the SEC forced Telegram to abandon its crypto project and the company had to pay a fine of 18.5 million dollars.