TheBlock
New York Attorney General Letitia James announced an April 29 settlement requiring crypto platform Uphold HQ Inc. to pay more than $5 million to customers who lost money through Cred's CredEarn yield product, which Uphold promoted from January 2019 to October 2020. More than 6,000 Uphold customers invested roughly $50 million into CredEarn through the platform; when Cred LLC filed for bankruptcy in November 2020, those investors lost more than $34 million. The $5 million payment is more than five times the fees Uphold collected from hosting the product, and the company must also hand over any recovery from Cred's bankruptcy.
Why it matters
The settlement is the first New York enforcement action to target a platform that promoted someone else's crypto yield product rather than the product's own issuer. James's office found Uphold acted as an unregistered broker and commodity broker-dealer under New York's General Business Law, extending the legal theory behind the SEC's $100 million BlockFi settlement in 2022 from issuer to promoter. The case also surfaces the marketing failures that drove the losses: Uphold marketed CredEarn as a savings-like product, relayed Cred's claim that it carried "comprehensive insurance" when no policy on the market covered retail investors against digital-asset losses, and did not disclose that Cred generated returns by routing customer crypto through Chinese microlender MoKredit, which made uncollateralized two-week loans to low-income video game players — some as small as $1.45.
Market impact
Uphold CEO Simon McLoughlin pushed back on the settlement, calling the AG's characterization "profoundly inaccurate" and noting the DOJ identified Uphold as a victim of Cred's fraud in a separate criminal case; only 21 of the affected investors were New York residents. But the structural read for the industry is the promoter-liability theory itself, paired with a new compliance overlay: Uphold must implement formal due diligence on any third-party product it lists, including review of audited financials, insurance policies, and independent interviews with auditors and competitors.
Frequently asked questions
-
What did the New York AG actually settle with Uphold over?
An April 29 Assurance of Discontinuance requiring Uphold HQ Inc. to pay more than $5 million to customers who lost money in Cred's CredEarn yield product, which Uphold promoted from January 2019 to October 2020.
-
How much money did Uphold customers lose in CredEarn?
More than 6,000 Uphold customers invested roughly $50 million into CredEarn; when Cred LLC filed for bankruptcy in November 2020, those investors lost more than $34 million.
-
Why is this settlement different from prior crypto yield cases?
It is the first New York enforcement action to target a platform that promoted someone else's crypto yield product rather than the product's own issuer, extending the SEC's 2022 BlockFi theory from issuer to distribution layer.
-
What did the AG say Uphold did wrong in marketing CredEarn?
James's office found Uphold marketed CredEarn as a savings-like product, relayed Cred's claim of "comprehensive insurance" when no policy covered retail digital-asset losses, and did not disclose that returns came from uncollateralized MoKredit loans to low-income video game players.
-
Why does the timing matter for Uphold?
The Block reported in June 2025 that Uphold's board had appointed FT Partners to explore a US IPO at a valuation north of $1.5 billion — a promoter-liability settlement and a new third-party due-diligence mandate complicate that path.
CryptoSlate
Crypto News
WuBlockchain
WatcherGuru