New York Attorney General Letitia James has secured a $5 million settlement from cryptocurrency platform Uphold over its role in promoting a fraudulent investment product called CredEarn. The settlement, announced May 4, 2026, requires Uphold to compensate affected customers who lost money when the underlying company, Cred LLC, collapsed.
How the scheme worked
Between January 2019 and October 2020, Uphold marketed CredEarn to its users as a safe savings product offering attractive annual interest payments. However, the Attorney General’s office found that Uphold failed to disclose that Cred was generating those returns by making microloans to low-income video game players in China — borrowers with no credit histories and no access to traditional banks.
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Uphold also falsely claimed that Cred carried “comprehensive insurance” protecting retail investors from digital asset losses. According to the Attorney General, no such insurance existed in the industry at the time. Additionally, Uphold was operating without the required broker or commodity broker-dealer registration.
Cred collapse left thousands of users stranded
Cred began accumulating losses from its risky lending practices in March 2020 and filed for bankruptcy eight months later. Thousands of Uphold customers around the world were left unable to access their funds.
Under the settlement, Uphold will pay $5 million directly to affected customers — more than five times the fees it collected from the arrangement. Any funds Uphold recovers from Cred’s ongoing bankruptcy proceedings, where it is owed $545,189, will also be passed on to harmed investors. Affected users will be notified by email when the funds hit their accounts.
Uphold’s response
Uphold has pushed back against the Office of the Attorney General’s characterization of events. The platform said it was itself a victim of fraud by Cred executives and that it acted swiftly to freeze Cred’s access and alert regulators once it discovered the problem.
“Without Uphold’s intervention, Cred would have continued soliciting and receiving funds while concealing its losses,” the platform wrote in a statement.
Broader regulatory context
The settlement comes amid heightened scrutiny of cryptocurrency platforms by New York regulators. Last month, New York sued Coinbase and Gemini, claiming their prediction market offerings violated state gambling laws. The CFTC subsequently sued New York in federal court, arguing that federal law gives it sole authority over prediction markets and asking for a permanent injunction to block the state’s enforcement actions.
Conclusion
This case highlights the risks investors face when crypto platforms promote products without full disclosure. “Investors should be able to trust the industry advice they receive,” James said, “and my office will always work to ensure bad actors are held accountable for endangering their customers’ financial security.” The $5 million settlement serves as a reminder of the importance of due diligence and regulatory oversight in the rapidly evolving cryptocurrency space.
FAQs
Q1: What was CredEarn?
CredEarn was a crypto savings product offered by Cred LLC and promoted by Uphold. It promised high interest returns but actually used customer funds for risky microloans to low-income borrowers in China.
Q2: How much will affected customers receive?
Uphold will pay $5 million directly to affected customers, which is more than five times the fees it earned from the arrangement. Any additional funds recovered from Cred’s bankruptcy will also be distributed to harmed investors.
Q3: Is Uphold still operating?
Yes, Uphold continues to operate. The company has stated it was itself a victim of fraud by Cred executives and cooperated with regulators once the issue was discovered.
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