- New York Attorney General Letitia James secured over $5 million from crypto platform Uphold for promoting a fraudulent yield product.
- Uphold marketed CredEarn as a safe savings product without disclosing the risky, uninsured microloans funding its returns.
- The platform operated without proper registration, and thousands of its users lost funds when Cred collapsed into bankruptcy.
- Under the settlement, Uphold will pay $5 million directly to affected customers and pass on any future bankruptcy recoveries.
New York Attorney General Letitia James has secured a $5 million settlement from cryptocurrency platform Uphold for its role in promoting a fraudulent investment product called CredEarn. The platform marketed the product to users between January 2019 and October 2020 as a safe, reliable savings option with attractive interest payments.
However, Uphold failed to disclose that the returns were generated by Cred making risky microloans to low-income video game players in China, the Attorney General’s office said. The platform also falsely claimed Cred carried “comprehensive insurance,” which did not exist for retail digital asset losses at the time.
Consequently, thousands of Uphold customers globally suffered losses when Cred filed for bankruptcy in late 2020 after racking up losses from its lending practices. Attorney General James stated, “Investors should be able to trust the industry advice they receive,” emphasizing her office’s commitment to accountability.
Meanwhile, the settlement requires Uphold to pay $5 million directly to affected customers, more than five times the fees it collected. Any funds Uphold recovers from Cred’s ongoing bankruptcy proceedings will also be passed on to harmed investors, who will be notified by email.
This action follows other recent legal moves by New York, including lawsuits against Coinbase and Gemini over prediction markets. The CFTC subsequently sued the state, arguing federal law gives it sole authority over such markets and seeking to block enforcement.
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