Abra announced Wednesday that it is breaking away from its retail roots and launching its first SEC-registered RIA aimed at catering to accredited investors.
Abra has previously focused on retail customers.
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Posted on April 17, 2024 at 9:22am EST.
From a beleaguered digital asset lender with a large retail volume to an institutional crypto asset manager serving the needs of hedge funds and venture capitalists, Abra's reinvention is here to stay.
The firm announced Wednesday the launch of Abra Capital, a new institutional investment organization recently recognized as a registered investment advisor (RIA) by the U.S. Securities and Exchange Commission. The development comes on the heels of a difficult period for Abra, where the company faced up to five state investigations, several of which claimed that the company's yield products sold to retail investors constituted unregistered securities. At least one company has accused Abra and its CEO Bill Berhyde of securities fraud.
The customer's funds were frozen while the investigation continued.as a company a settlement was reached Last July, Abra announced that it would “immediately focus on retail operations outside the United States,” partnering with states such as Texas and Oregon.
Following the phasing out of its US retail business unit, the company restructured its US presence to focus solely on institutional customers. Abra has maintained a retail presence internationally.
CEO Barhydt told Unchained that Abra has been reaching out to existing high-net-worth clients in recent weeks in an effort to attract new business. While some companies have suffered from asset freezes by state regulators, the biggest problem with the old model “is that it puts counterparty risk on the company,” Barheit said.
Abra's new service primarily consists of Separately Managed Accounts (SMAs), so customers retain ownership of their assets even if Abra goes bankrupt. The team is also pursuing family offices and trusts.
“The whole goal of launching Abra Capital Management based on the SMA model was to be able to go back to our high-net-worth clients and say, 'Hey, we're back. We've got a model that allows you to make money again.' ''' he said. 'And you can do it in a way that fully protects the asset as long as you retain ownership of the asset. And if Abra is gone… However, they are still your property.”
Abra Capital is headquartered in San Francisco. SEC In January, it reported that $102.5 million in total assets were split between discretionary and non-discretionary strategies managed through SMAs. Regulatory filings also show that Abra Capital plans to raise money for hedge funds. The entity does not utilize leverage.
With the addition of Abra Prime and Abra Private, the company is launching an all-in-one platform for big-money limited partners and institutional investors. It is designed to cover the main brokerage models for traders, including spot and over-the-counter options (OTC) desks, lending and borrowing, staking and yield products.
Build yield by expanding demand for BTC and ETH
The filing outlines a number of Abra Capital's strategies, including staking, lending and providing liquidity. DAPP.
SMAs in the asset management sector are designed with liquidity in mind, including borrowing while trading assets. However, Abra has some caveats, including the lack of SMA support for participating in protocol governance votes.
“There is a huge demand for a reliable and secure platform to earn yield on Bitcoin, Ethereum and other crypto assets, and to borrow your crypto holdings,” Marissa Kim, head of asset management at Abra, said in a statement. Stated.
The exit from U.S. retail customers is one of many business areas that the more than 10-year-old Abra has abandoned.office Bed Our big goal is to become the first crypto bank registered in the US in 2022.
read more: Cryptocurrency lender Abra has been in bankruptcy since March, state regulators say
The crypto market crash in Q4 2022 seemed to put a pause on these banks' bold plans, but they never resurfaced. Around the same time, Abra uncertainty has launched enhancements to its institutional services, including over-the-counter trading capabilities and structured crypto products.
However, in a sense, Abra has built a virtual currency bank without building one. Many similar services, including lending and borrowing, are being considered. The main difference is that there are no retail investors involved.
“Investment advisors are clearly not banks,” Barheit says. “But our original goal of wanting to be a bank was to be able to provide these services. And when we looked into it…we thought, we wanted… It turns out that things aren't achieved quickly, and this structure achieved what we wanted very nicely. [available] Yield, staking, lending, and the ability to invest in Bitcoin, Ethereum, Solana, and other crypto assets. ”
