New York Attorney General Letitia James has secured more than $5 million from cryptocurrency trading platform Uphold HQ Inc. in a settlement resolving allegations that the company misled customers by heavily promoting a third-party yield product that ultimately collapsed, resulting in substantial investor losses. The agreement, announced on April 29, 2026, marks a notable enforcement action focusing not on the issuer of the failed product but on the investing platform that facilitated its distribution to users.
According to the investigation by the Attorney General’s Office, Uphold integrated and aggressively marketed CredEarn—a cryptocurrency lending program developed by Cred LLC and its then-CEO Daniel Schatt—through its website and mobile application from January 2019 to October 2020.
The platform portrayed CredEarn as a straightforward, low-risk savings vehicle that allowed users to earn attractive annual interest rates on their digital assets.
Promotional materials highlighted it as a “revolutionary savings product” available exclusively via Uphold, drawing comparisons to traditional banking options and emphasizing supposed safeguards.
In reality, Cred channeled the pooled funds into high-risk microloans extended primarily to video game enthusiasts in China, many of whom had limited incomes, no formal credit records, and little access to conventional banking.
Uphold also referenced “comprehensive insurance” coverage for the assets, even though no such protections existed in the industry to shield retail investors from losses on digital holdings.
When Cred encountered mounting losses from its lending practices and filed for bankruptcy in November 2020, more than 6,000 Uphold customers worldwide suffered combined losses exceeding $34 million on roughly $50 million invested.
Under the terms of the Assurance of Discontinuance, Uphold will distribute $5 million directly to affected investors—more than five times the fees the company earned from the arrangement.
Any additional recoveries Uphold obtains from Cred’s ongoing bankruptcy proceedings, where it holds an unsecured claim of approximately $545,000, will also flow to harmed customers.
The company must enhance its internal due diligence procedures for evaluating and recommending third-party investment offerings and formally register as a broker with the Attorney General’s Office. These steps aim to prevent similar issues moving forward.
Attorney General James emphasized the importance of accountability in the digital asset space. “Uphold promoted risky investments and misled its customers to believe they were safe,” she stated. “Investors should be able to trust the industry advice they receive.”
The settlement requires no admission of liability by Uphold, which instead acknowledges the factual record while resolving the inquiry without further litigation.
In response, Uphold issued a statement disputing certain aspects of the Attorney General’s public description of events.
The company maintained that it was itself deceived by Cred’s actions and acted promptly to protect customers once problems surfaced.
CEO Simon McLoughlin described the firm as a victim of the third-party fraud rather than a knowing participant.
This case underscores growing regulatory focus on intermediaries in the cryptocurrency ecosystem.
By targeting platforms that promote external yield products without proper registration or adequate vetting, New York authorities signal that due diligence and transparency are non-negotiable, even for companies not directly originating the investments.
Industry professionals note it could influence how other crypto services evaluate partnerships and communicate risks to users. The settlement provides partial restitution to roughly 2,200 eligible investors identified by the Attorney General’s Office, with funds expected to reach accounts via direct deposits or approved stablecoins. It reinforces broader efforts by James’s office to safeguard New Yorkers from digital asset-related harms. But her actual understanding of these innovations is questionable and her approach does not always represent the most sensible or practical course of action.