New York Forces Uphold to Pay $5M Over Fraudulent Crypto Product

May 3, 2026 — New York Attorney General Letitia James has secured a $5 million settlement from cryptocurrency platform Uphold for promoting CredEarn, a fraudulent crypto savings product that misled users about its risks and left thousands of investors facing losses.

Immediate Details & Direct Quotes

The settlement centers on Uphold’s promotion of CredEarn, a product offered by Cred, LLC and its CEO Daniel Schatt. Between January 2019 and October 2020, Uphold marketed CredEarn on its platform and mobile app as a safe, reliable savings product offering attractive annual interest payments.

However, the Attorney General’s office found that Uphold failed to disclose critical information to customers. Cred was generating returns by making microloans to low-income video game players in China — borrowers with no credit histories and no access to traditional financial institutions.

Uphold also falsely claimed that Cred carried “comprehensive insurance” protecting retail investors, according to the Attorney General’s announcement. No such insurance covering digital asset losses existed in the industry at the time.

“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.”

Additionally, Uphold was operating without the required broker or commodity broker-dealer registration during the promotion period.

Market Context & Reaction

The settlement requires Uphold to 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.

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, according to the announcement.

Affected users will be notified by email when the funds hit their accounts. Market reaction details from Uphold’s platform operations were not immediately available.

Background & Historical Context

The settlement comes amid broader regulatory scrutiny of cryptocurrency platforms in New York. Last month, New York sued Coinbase and Gemini, claiming their prediction market offerings violated state gambling laws.

The Commodity Futures Trading Commission (CFTC) fired back by suing New York in federal court, arguing that federal law gives it sole authority over prediction markets. The CFTC is seeking a permanent injunction to block the state’s enforcement actions.

The Uphold case highlights ongoing tensions between state regulators and crypto platforms over consumer protection obligations. The Attorney General’s office emphasized that Uphold’s failure to disclose CredEarn’s true risks and its unregistered operations violated investor trust and state law.

What This Means

For affected Uphold users, direct compensation is forthcoming via email notification when funds are distributed. Investors should verify their contact information with the platform.

The settlement signals that state regulators will aggressively pursue crypto platforms that fail to conduct proper due diligence on third-party products. Uphold’s liability for promoting CredEarn — despite not being the product’s issuer — sets a precedent for platform responsibility.

Cred’s ongoing bankruptcy proceedings may yield additional recoveries for harmed investors, though the timeline remains uncertain.

Industry observers should expect increased scrutiny on crypto savings and lending products, particularly regarding disclosure of underlying investment strategies and insurance claims.

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