NY Attorney General Secures $5 Million Settlement with Crypto Platform Uphold Over Promotion of Risky Investment Products

New York Attorney General Letitia James announced that she has secured more than $5 million in a settlement from the cryptocurrency platform Uphold HQ Inc. This settlement is the result of an intensive investigation into the promotion of investment products—which served as conduits for high-risk loans—as "safe" savings products. First disclosed on April 29, 2026, this action is considered a significant victory for thousands of investors who lost assets following the 2020 bankruptcy of third-party service provider Cred LLC.

The practice of cryptocurrency companies misleading investors and deceptively promoting risky investment products as safe savings vehicles will never be tolerated in New York.

The settlement funds of over $5 million will be used entirely as compensation for affected customers. According to the Office of the Attorney General (OAG), Uphold deceived investors by concealing the actual risks while promoting a product called CredEarn. Beyond merely imposing a fine, this settlement emphasizes the due diligence obligations and transparency that platforms must maintain when brokering third-party products.

The Gap Between Marketing and Reality: The Truth About CredEarn

Uphold heavily marketed CredEarn, describing it as a reliable savings product and a "safe haven" for assets. However, regulatory investigations revealed that Cred was issuing risky loans to borrowers in China with no credit history. Uphold, which collaborated with Cred CEO Daniel Schatt, failed to properly inform users of these risks despite knowing or being in a position where they should have known about them.

• Uphold misled users regarding the safety of funds while generating fee revenue through CredEarn.
• The actual loans were made to unverified overseas borrowers.
• The nature of the product was closer to a fraudulent investment scheme than an interest-bearing account.
• Uphold did not conduct a rigorous due diligence process on its third-party partner.

When Cred filed for bankruptcy protection in November 2020, thousands of customers worldwide who had invested through Uphold suffered millions of dollars in losses. At the time, many investors believed their assets were being managed safely, only to lose their entire investment upon Cred's collapse. This action by the New York Attorney General serves as both legal retribution and a remedy for the tragic events that occurred approximately six years ago.

Under the terms of the settlement, Uphold must pay $5 million to affected investors, an amount more than five times the fees Uphold earned from promoting CredEarn. Additionally, Uphold is obligated to pass on to customers any funds recovered through Cred's ongoing bankruptcy proceedings. Eligible investors will receive direct notification soon, and the compensation process will be conducted under the supervision of the New York Attorney General.

New York's Strong Stance on Cryptocurrency Regulation

This case reaffirms the "zero-tolerance principle" that New York State has maintained toward the cryptocurrency industry. Attorney General Letitia James made clear her commitment to cracking down on crypto platforms that operate in regulatory gray areas and fail to protect consumers. This serves as a strong warning to other crypto firms operating in New York regarding the legal risks associated with third-party product partnerships.

Independent of this settlement, Uphold must officially register as a broker in New York State and adhere to enhanced due diligence processes when launching third-party products in the future. Currently, Uphold is focusing on rebuilding trust by obtaining SOC 2 Type 2 and ISO 27001 certifications and claiming to maintain 100% reserves. However, the responsibility for past mismanagement has been addressed through this $5 million settlement payment.

Experts believe this action will serve as a catalyst for increasing transparency in the cryptocurrency market. Investors are advised to more closely examine the risks hidden behind yields offered by platforms, and regulators are expected to continue strengthening oversight to protect consumers from similar fraudulent products. Uphold users should carefully monitor future announcements regarding specific compensation schedules and procedures.