NY AG hits Uphold with $5M settlement in first enforcement action targeting a crypto yield promoter.

New York Attorney General Letitia James secured more than $5 million from crypto platform Uphold over its promotion of CredEarn, a third-party yield product that collapsed when operator Cred LLC filed for bankruptcy in November 2020. More than 6,000 Uphold customers invested roughly $50 million into CredEarn; when Cred failed, they lost more than $34 million. The $5 million payment is over five times the fees Uphold collected from hosting the product.

The settlement is legally significant because it targets the distribution layer — the platform that promoted the product — rather than the product's own issuer. James's office found Uphold marketed CredEarn as a safe, savings-like product while failing to disclose that yields were generated by funneling customer crypto through a Chinese microlender making uncollateralized loans to video game players. Uphold also relayed Cred's claim of…