The New York Attorney General's Office (NY AG) announced on April 29, 2026, that Uphold HQ Inc. will pay more than $5 million to compensate customers who lost money through CredEarn, a third-party crypto investment product offered by Cred LLC. The settlement resolves claims that Uphold promoted CredEarn without registering as a broker under New York law and misrepresented the product as a safe savings-like vehicle while Cred's underlying loans were high-risk.
How CredEarn Worked and Why It Failed
From January 2019 to October 2020, Uphold offered CredEarn on its platform and mobile app, promising annual interest to customers who deposited cryptocurrency with Cred. The NY AG investigation found that Cred generated returns through risky lending: loans were made to video game players in China with low monthly incomes, no credit histories, and no access to traditional Chinese credit. Uphold also stated that Cred had "comprehensive insurance," but no coverage protected retail investors from digital asset investment losses. Cred began suffering losses in March 2020 due to risky lending practices and mismanagement, filing for bankruptcy in November 2020. Thousands of Uphold customers worldwide lost millions of dollars.
Settlement Terms: Compensation and Compliance
Under the settlement, Uphold must pay $5 million directly to affected customers—more than five times the fees Uphold collected from the CredEarn arrangement. Additionally, any recovery Uphold receives from Cred's bankruptcy proceedings (currently $545,189 owed) must be transferred to harmed investors. Uphold must also strengthen its due diligence policies before partnering with or recommending third-party investment products and will register as a broker with the Office of the Attorney General. New York Attorney General Letitia James stated: "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."
Broader Regulatory Context
This case is part of a larger enforcement record by the NY AG's office, which has treated crypto as a financial market subject to investor protection rules. Using the Martin Act of 1921 (which does not require proving intent), the office has pursued crypto fraud since 2014. Key actions include the 2018 Virtual Markets Integrity Initiative, the 2019 Ifinex/Bitfinex/Tether case, the 2021 Coinseed shutdown, and lending platform cases involving BlockFi. From 2023 to 2026, larger cases included Genesis Global, Gemini, and DCG; Novatechfx; Galaxy Digital; Uphold; and April 2026 lawsuits against Coinbase and Gemini over prediction markets. These actions have secured more than $2.5 billion in restitution and penalties while pushing major firms to adjust compliance for New York market access.
What This Means for the Industry
The Uphold settlement underscores that platforms offering third-party crypto products face significant regulatory exposure if they fail to conduct proper due diligence and register as brokers. Investors should be wary of high-yield crypto products claiming insurance, especially when offered by unregistered entities. Going forward, New York is expected to continue its aggressive enforcement stance, requiring all platforms recommending investment products to meet strict standards.