New York Attorney General Letitia James Secures $5M From Uphold Over CredEarn Promotion

New York Attorney General Letitia James has secured more than $5 million from cryptocurrency platform Uphold over its promotion of CredEarn, a crypto savings product tied to Cred, LLC.

“Uphold will pay more than $5 million to compensate customers affected by CredEarn, a third-partycryptoinvestment product”

Bitcoin News

The settlement requires Uphold HQ Inc. to pay more than $5 million directly to customers affected by the failed CredEarn product, and it also adds obligations around product reviews, broker registration, and the transfer of any Cred bankruptcy recoveries to harmed investors.

Cointelegraph

The New York Attorney General’s office said Uphold promoted CredEarn between January 2019 and October 2020, marketing it through Uphold’s platform and mobile app as a reliable crypto savings product with interest payments.

The settlement said CredEarn came from Cred, LLC and its CEO Daniel Schatt, and it described the product as a savings-style offering while Cred generated returns through risky lending activity.

New York said key risks were not disclosed, including that Cred used funds to make risky loans to borrowers in China, and that Uphold told users that Cred had “comprehensive insurance.”

The office found that claim false, saying no such insurance protected retail investors from digital asset losses at the time, and it said Cred began facing losses from its lending activity in March 2020 before filing for bankruptcy later that year.

Under the settlement, Uphold will pay more than $5 million directly to affected customers, with the amount described as more than five times the fees Uphold collected from the arrangement, and any money Uphold recovers from Cred’s bankruptcy case will also go to harmed investors.

New York’s case against Uphold focused on how CredEarn was presented to customers and what the Attorney General’s office said was missing from that presentation.

The New York Attorney General’s office said Uphold promoted CredEarn as a reliable crypto savings product with interest payments, but it found that customers were not told about risky lending behind those advertised returns clearly.

crypto.news

The settlement said Uphold did not tell customers that Cred used funds to make risky loans to borrowers in China, and it described those borrowers as including low-income video game players with no credit histories and limited access to banks.

The settlement also said Uphold told users that Cred had “comprehensive insurance,” and it found that claim false, saying no such insurance protected retail investors from digital asset losses at the time.

The Cointelegraph account similarly states that Uphold marketed CredEarn between January 2019 and October 2020 as a safe, reliable savings product with attractive annual interest payments while not disclosing that Cred was generating returns by making microloans to low-income video game players in China.

In that telling, the borrowers were described as typically having no credit histories and no access to traditional financial institutions.

The Bitcoin News account adds that the Office of the NY Attorney General found that customers were given a savings-style presentation while Cred generated returns through risky lending activity, and it states that Cred later suffered losses beginning in March 2020 and filed for bankruptcy in November 2020.

Across the reporting, the same core allegation appears: Uphold’s customer-facing marketing did not provide a clear view of the risks behind the advertised returns, and it included an insurance claim that the Attorney General’s office said was not true.

The settlement also included direct statements from New York and from Uphold’s leadership, reflecting a dispute over how the state characterized the conduct.

“New York Attorney General Letitia James has secured more than $5 million from crypto platform Uphold”

crypto.news

New York Attorney General Letitia James said, “Investors should be able to trust the industry advice they receive,” framing the settlement as part of ensuring accountability for conduct that endangers customers’ financial security.

The Bitcoin News account quotes James again, saying, “Investors should be able to trust the industry advice they receive, and my office will always work to ensure bad actors are held accountable for endangering their customers’ financial security.”

It further quotes James in a broader statement: “Whencryptocompanies break the law and mislead investors, the consequences can be devastating to New Yorkers’ livelihoods.”

Against that, Uphold disputed parts of the state’s framing, with its CEO Simon McLoughlin saying he was “deeply disappointed” and calling the Attorney General’s statement “profoundly inaccurate.”

The crypto.news report notes that Uphold has disputed parts of the state’s framing and quotes McLoughlin directly, while the Cointelegraph report also attributes the James quote about investors trusting industry advice.

Taken together, the statements show a direct clash: James portrays the conduct as misleading and unlawful, while McLoughlin says the Attorney General’s statement is “profoundly inaccurate.”

Beyond customer compensation, the settlement described regulatory requirements and how New York characterized the legal basis for its enforcement.

The crypto.news report says the Attorney General’s office also said Uphold operated without required broker or commodity broker-dealer registration, and it states that the settlement document says digital assets are commodities under New York’s Martin Act.

Cointelegraph

In that account, Uphold failed to register while offering crypto and promoting CredEarn, and it places the settlement within New York’s wider enforcement push against crypto products and market operators.

The Bitcoin News account similarly states that the investigation found Uphold promoted CredEarn without registering as a broker or commodity broker-dealer under New York law, and it says the settlement requires stronger product reviews, broker registration, and transfer of any Cred bankruptcy recoveries to harmed investors.

It also describes the due diligence and due review obligations, stating that Uphold must maintain and improve its due diligence policies before partnering with or recommending third-party investment products, and it says the company will also register as a broker with the Office of the Attorney General.

The JD Supra digest adds a separate federal enforcement context, quoting Acting U.S. Attorney General Todd Blanche at the Bitcoin 2026 conference in Las Vegas and describing his April 2025 memorandum titled “Ending Regulation by Prosecution.”

In that digest, Blanche reiterated his commitment to the memorandum and told attendees that lawyers representing crypto software developers “should feel very comfortable communicating” with his office to ensure prosecutors comply with the memo.

The JD Supra digest also states that the April 2025 memo announced the disbandment of the National Cryptocurrency Enforcement Team and instructed prosecutors not to pursue charges for regulatory violations under federal banking, securities, or commodities laws absent evidence of willful intent.

The Uphold-CredEarn settlement is presented in the sources as part of a broader enforcement and litigation landscape involving New York and federal regulators, with consequences extending to investors and to how platforms handle third-party products.

“Uphold will pay more than $5 million to compensate customers affected by CredEarn, a third-partycryptoinvestment product”

Bitcoin News

The crypto.news report says the Uphold settlement comes as New York continues its wider crypto enforcement push, and it notes that last month the state sued Coinbase and Gemini over prediction market offerings, alleging that the products violated state gambling laws.

crypto.news

It adds that the CFTC later sued New York in federal court, arguing that federal law gives it authority over prediction markets, describing the separate dispute as showing how state and federal regulators are still contesting control over parts of the crypto market.

Within the CredEarn matter itself, the sources describe the investor impact as tied to Cred’s bankruptcy and the timing of losses, with the crypto.news report saying Cred filed for bankruptcy later that year after losses began in March 2020, leaving thousands of Uphold customers with losses.

The Cointelegraph report states that Cred began racking up losses from its risky lending practices in March 2020 and filed for bankruptcy eight months later, leaving thousands of Uphold customers around the world holding the bag.

The Cointelegraph report provides a specific figure for the bankruptcy recovery amount, saying Uphold is owed $545,189 in Cred’s ongoing bankruptcy proceedings, and it states that any funds Uphold recovers will also be passed on to harmed investors.

The Bitcoin News account says investors will receive an email from Uphold explaining that funds will be distributed to their accounts, and it describes the repayment plan as directing $5 million to customers who suffered losses, more than five times the fees Uphold collected.

The JD Supra digest also reiterates that the settlement is under an Assurance of Discontinuance and that Uphold will pay $5 million to harmed investors, improve third-party due diligence policies, and register as a broker with the OAG.