Key Takeaways:
- Uphold will pay more than $5 million to customers tied to CredEarn losses.
- Regulators said CredEarn was presented like savings while relying on risky lending activity.
- Next, Uphold must strengthen due diligence, register as a broker, and distribute recoveries.
Uphold Settlement Raises Crypto Investor Protection Stakes
New York Attorney General (NY AG) Letitia James announced on April 29, 2026, that Uphold HQ Inc. will pay more than $5 million in customer compensation tied to CredEarn, a third-party crypto investment product from Cred LLC. The settlement centers on investor repayment, product-review standards, and registration requirements for platforms offering outside digital asset products.
Uphold made CredEarn available through its platform and mobile app from January 2019 to October 2020. The product offered annual interest to customers who placed cryptocurrency with Cred. The Office of the NY Attorney General found that customers were given a savings-style presentation, while Cred generated returns through risky lending activity. Those loans went 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,” although no coverage protected retail investors from digital asset investment losses. James said:
“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.”
The investigation also found that Uphold promoted CredEarn without registering as a broker or commodity broker-dealer under New York law.
New York Crypto Enforcement Pushes Stronger Compliance
The case underscores how third-party crypto products can create regulatory exposure when they are offered through customer-facing platforms. CredEarn was available inside Uphold’s own digital channels, making product review and risk assessment central to the settlement. Cred later suffered losses beginning in March 2020 after risky lending practices and mismanagement. The company filed for bankruptcy in November 2020, and thousands of Uphold customers worldwide lost millions of dollars. Under the settlement, Uphold must maintain and improve its due diligence policies before partnering with or recommending third-party investment products. The company will also register as a broker with the Office of the Attorney General.
The Uphold settlement also fits into a broader New York Attorney General’s office enforcement record that has treated crypto as a financial market subject to investor protection rules. The office has used the Martin Act of 1921 to pursue financial fraud cases without proving intent. Its crypto activity began as early as 2014 with inquiries into the “shadow” market, then expanded through the 2018 Virtual Markets Integrity Initiative, the 2019 Ifinex, Bitfinex, and Tether case, the 2021 Coinseed shutdown, and lending platform actions, including 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. Those actions secured more than $2.5 billion in restitution and penalties, while pushing major firms to adjust compliance for New York market access.
The repayment plan directs $5 million to customers who suffered losses, more than five times the fees Uphold collected from the arrangement. Uphold must also transfer any recovery it receives from Cred’s bankruptcy proceedings to affected customers. It is owed $545,189 in that case. Investors will receive an email from Uphold explaining that funds will be distributed to their accounts. James said:
“When crypto companies break the law and mislead investors, the consequences can be devastating to New Yorkers’ livelihoods.”
The resolution closes the matter with customer repayment, broker registration, and stronger review standards for third-party crypto investment offerings.
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