Abra Acquires Valkyrie’s Trusts Amid Regulatory Challenges in Crypto Sector

• Abra’s acquisition of Valkyrie’s trusts highlights strategic shifts amidst crypto regulatory challenges.
• CoinShares’ ETF expansion and Abra’s trust acquisition reshape the U.S. crypto investment sector.
• Regulatory settlements impact Abra’s U.S. operations, emphasizing compliance and customer protection.

In a significant development within the cryptocurrency investment, Justin Sun’s Valkyrie Investments has sold its private trust business to Abra. This follows the company’s divesting of its ETF operations. Sun’s calculated action demonstrates significant changes in the cryptocurrency investment market.

Regulatory Challenges and Strategic Acquisitions

In May 2024, a famous trading platform, Abra, acquired Valkyrie’s private crypto trusts consisting of TRON and Zilliqa-related assets. This acquisition comes as Abra navigates through regulatory challenges, notably settling licensing disputes with regulators across 25 U.S. states. These efforts are essential following accusations of insolvency and securities fraud leveled against Abra in 2023, which prompted a corrective agreement with the Texas State Securities Board to wind down certain operations.

Moreover, CoinShares entered the fray by acquiring Valkyrie’s ETF business and advisory arm, rebranding these assets under its own banner for expanded operations in the United States. Marissa Kim, Abra’s head of asset management, hinted at potential public listings for the acquired trusts, contingent on market demand.

Settlements and Compliance Efforts

In 2023, Texas regulators accused Abra of financial instability and deceptive practices, leading to a cease and desist order. Fast forward to January 2024, Abra struck an agreement with the Texas State Securities Board to orderly wind down operations, ensuring the return of funds to investors and liquidation of remaining assets into fiat currencies.

As part of settling with financial regulators from 25 U.S. states for operating without proper licenses, Abra is obligated to return $82.1 million worth of cryptocurrencies to its U.S. customers. This settlement comes after Abra ceased offering services in the U.S. last year following regulatory pressures.

The Conference of State Bank Supervisors (CSBS) announced that Abra will cease cryptocurrency transactions for its Abra Trade accounts with U.S. customers, halting all buying and trading activities. Notably, regulators in several states, including Washington, Texas, Georgia, and Ohio, refrained from imposing monetary penalties to prioritize full reimbursement to affected customers.

In January 2024, Abra resolved allegations of insolvency and securities fraud with Texas regulators, reaffirming its commitment to transparent operations and customer protection. Leah Wald, co-founder and former CEO of Valkyrie, recently resigned amidst these strategic maneuvers. Valkyrie, however, has not issued any immediate comments on the sale of its crypto trusts to Abra.