Crypto Lender Abra Has Been Insolvent for Months

[panganib999]

I have heard this name for the first time in my life despite being in this community (active). So maybe not a big deal but it is because it's crypto, isn't it?
Everything in Crypto is BIG. So a lender called Abra getting insolvent in a bear market, where the biggest of the biggest fall is a big news.

Nah  it was a pretty big cryptocurrency exchange/wallet service back in the day, I’ve even seen money remittance centers in my country offering swap to cryptocurrency through the Abra platform, so they hold a lot of relevance. This insolvency however has been predicted way back in the past though, since every other platform remained standing strong whilst Abra barely scrapes by as more and more people switch over to much more popular platforms. Still sucks cause it’s pretty much a good part of the crypto history but at the same time I blame the creators of this platform for their lack of anything to offer besides exchanging and safekeeping, with the latter even becoming out of the question cause this is a centralized exchange we’re talking about and they particularly suck at making sure their user’s coins are safe.

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[stompix]

I have heard this name for the first time in my life despite being in this community (active). So maybe not a big deal but it is because it's crypto, isn't it?

It was one of  the largest remittance gateway then crypto lenders of the old generation that didn't go bust in the previous waves of bankrupcies, most users have seen it like the killer app that as needed in 2014-2015, then it really expanded into exchange, shitcoins interest and so on, probably their peak moment of glory in 2017 having enough money to bribe celebrities into advisory roles
https://www.forbes.com/sites/laurashin/2017/08/02/bitcoin-startup-abra-adds-gwyneth-paltrow-as-advisor-is-featured-in-apple-reality-tv-show/

It's way older than most members here 

but at the same time I blame the creators of this platform for their lack of anything to offer besides exchanging and safekeeping, with the latter even becoming out of the question cause this is a centralized exchange we’re talking about and they particularly suck at making sure their user’s coins are safe.

Actually, if they would have just stuck to that business model they would have been fine, you don't need to expand in every direction if you have a solid business base, see how WU is thriving for decades and not going into anything else, lending money to a shitty business with shitcoins collateral is a recipe for disaster. And no sane person would deposit 10 BTC worth $300k to be able to take a $150k loan.

[Blitzboy]

I have heard this name for the first time in my life despite being in this community (active). So maybe not a big deal but it is because it's crypto, isn't it?
Everything in Crypto is BIG. So a lender called Abra getting insolvent in a bear market, where the biggest of the biggest fall is a big news.

Nah  it was a pretty big cryptocurrency exchange/wallet service back in the day, I’ve even seen money remittance centers in my country offering swap to cryptocurrency through the Abra platform, so they hold a lot of relevance. This insolvency however has been predicted way back in the past though, since every other platform remained standing strong whilst Abra barely scrapes by as more and more people switch over to much more popular platforms. Still sucks cause it’s pretty much a good part of the crypto history but at the same time I blame the creators of this platform for their lack of anything to offer besides exchanging and safekeeping, with the latter even becoming out of the question cause this is a centralized exchange we’re talking about and they particularly suck at making sure their user’s coins are safe.

Given the bear market, Abra's circumstances aren't shocking. Its crucial to note that crypto is a swift-moving sector, necessitating platforms to innovate and adjust. Abra' focus on transactions and safekeeping appears outdated. Their handling of security - a major issue with centralized exchanges - had room for improvement. Their decline is unfortunate but instructive for others.

Lets not lose focus on the wider panorama. Bitcoin and crypto have reshaped financial interactions, promising enormous potential. This occurrence, though important, is a small setback on a larger journey.

[o_e_l_e_o]

Given the bear market, Abra's circumstances aren't shocking.

You cannot blame a bear market for this (never mind that bitcoin is over 60% higher than it was 6 months ago).

Centralized exchanges, lending platforms, and what not, should be holding customers' deposits in cold storage. If they actually did this 100% of the time, then it doesn't matter if bitcoin is worth $1 or $1 million, because 1 BTC = 1 BTC and the platform will always have the exact amount needed to cover all their customers' deposits. It is when these platforms start wildly gambling customers' money that they run in to problems and end up insolvent.

[stompix]

Given the bear market, Abra's circumstances aren't shocking.

You cannot blame a bear market for this (never mind that bitcoin is over 60% higher than it was 6 months ago).

Centralized exchanges, lending platforms, and what not, should be holding customers' deposits in cold storage. If they actually did this 100% of the time, then it doesn't matter if bitcoin is worth $1 or $1 million, because 1 BTC = 1 BTC and the platform will always have the exact amount needed to cover all their customers' deposits. It is when these platforms start wildly gambling customers' money that they run in to problems and end up insolvent.

Exactly!
This wasn't supposed to be an investment form where you daily trade or open long positions it was most important of all a service that would take a percentage of the sum involved. It didn't matter if BTC was at 1000 or 10 000, if somebody was trying to send $500 of remittance they would still be taxed, it's not like suddenly they would make 10 times less.

If it were like this all casinos would be bankrupt also, but they don't seem to care about a bear or a bull market too much.

Abra tried to maximize its earnings, they tried to give very cheap loans with high collateral rates, you could get the cheapest on the market with a 1:5 ratio, then they would not only get money from the interest but also they played with your collateral by investing it in now-defunct platforms.So when the time was for liquidation to cover the not paid loan they had nothing to liquidate.

[savetheFORUM]

This wasn't supposed to be an investment form where you daily trade or open long positions it was most important of all a service that would take a percentage of the sum involved. It didn't matter if BTC was at 1000 or 10 000, if somebody was trying to send $500 of remittance they would still be taxed, it's not like suddenly they would make 10 times less.

If it were like this all casinos would be bankrupt also, but they don't seem to care about a bear or a bull market too much.

Abra tried to maximize its earnings, they tried to give very cheap loans with high collateral rates, you could get the cheapest on the market with a 1:5 ratio, then they would not only get money from the interest but also they played with your collateral by investing it in now-defunct platforms.So when the time was for liquidation to cover the not paid loan they had nothing to liquidate.

I think the idea itself was wrong to begin with, and the fact that it was a success for a short while doesn't mean that they thought it over for every possible scenario. This is why it failed, bear market does matter in a sense that during bull market a lot of people made profits so they were all capable of paying it back, but when the bear hit, nobody was capable of paying it and that's why they had a lot less customers and a lot less people paying.

No company can stay afloat that way and it is impossible to keep it going. I believe that we should be considering the situation as a way to get out of this easily, if it doesn't work in any other way then just do not put your money into places like this. The return doesn't worth the risk you are taking with trusting them.

[stompix]

I think the idea itself was wrong to begin with, and the fact that it was a success for a short while doesn't mean that they thought it over for every possible scenario.

The idea is pretty simple, if you stick to the basics you're safe and it works wonders even on this forum in the lending section if you just don't offer loans with collateral! One simply rule, that's all!

This is why it failed, bear market does matter in a sense that during bull market a lot of people made profits so they were all capable of paying it back, but when the bear hit, nobody was capable of paying it and that's why they had a lot less customers and a lot less people paying.

Two mistakes with this:
- in a bear market it's actually easier to pay back your loan if you took a crypto loan. If you took 1BTC at a price of 60k you had to pay back $5k a month plus interest for a one-year loan, right now you only have to pay 2k, so it's way easier.
- that's why collateral is in for, if you don't pay the lender gets the collateral, if the collateral goes under 110-120% of the value loaned it gets liquidated and your loan is terminated, you lose your coins but the lender isn't losing a penny

If the lender follows basic self-imposed rules and common sense he can't get rekt.
That's why in crisis in the real world loan sharks thrive, they don't get bankrupt!

No company can stay afloat that way and it is impossible to keep it going.

Then why are others still operating?

[Bananington]

So it happened in Texas. A likely case similar to that of FTX is what Abra has just been up to.
Am glad the securities team where able to detect on time and hint to the public, because the lies of bear market season would have been used to lock in more unsuspecting customer funds.
For fraud related case is really strong. Binance got its own lawsuit. What could be the reason for this exchanges misbehaving if not due to greed and insatiable quest for vanity.

We all should be wise to ignore such businesses that come with too good to be true offer in order to not become victims.