Key Takeaways
- • New York Attorney General Letitia James secured a $5 million settlement from cryptocurrency platform Uphold HQ Inc. on April 29, 2026, for misleading promotion of a fraudulent investment scheme.
- • Uphold promoted CredEarn, a product offered by now-bankrupt Cred LLC and its CEO Daniel Schatt, as a safe savings vehicle when Cred was actually making risky micro-loans to Chinese borrowers with no credit histories.
- • The settlement amount exceeds five times the fees Uphold collected from the scheme, requiring the platform to compensate harmed investors who lost millions when Cred collapsed in 2020.
- • Uphold falsely advertised CredEarn with nonexistent "comprehensive insurance" protection and offered the product on its platform and mobile app from January 2019 through October 2020.
- • As part of the settlement, Uphold must implement policy changes to strengthen protections against third-party investment schemes offered through its platform.
Summary
New York Attorney General Letitia James announced a settlement requiring cryptocurrency exchange Uphold HQ Inc. to pay $5 million to compensate investors harmed by the platform's promotion of a fraudulent cryptocurrency investment product. The settlement, reached on April 29, 2026, addresses Uphold's role in misleading customers about CredEarn, an investment vehicle operated by Cred LLC and its Chief Executive Officer Daniel Schatt.
Between January 2019 and October 2020, Uphold offered CredEarn on its platform and mobile application, marketing it to users as a reliable savings product with attractive interest returns. The Office of the Attorney General's investigation revealed that Uphold's promotional materials misrepresented the underlying investment strategy and risk profile. In reality, Cred generated returns by making risky micro-loans to video game players in China who had low monthly incomes, minimal credit histories, and no access to traditional financing. Uphold's marketing further claimed that CredEarn was protected by "comprehensive insurance"—a protection that did not exist in the cryptocurrency investment industry.
When Cred collapsed in 2020, thousands of Uphold customers worldwide who had invested in CredEarn lost millions of dollars. The $5 million settlement represents more than five times the fees Uphold collected from promoting the fraudulent scheme, demonstrating the scale of investor harm relative to the platform's financial benefit from the arrangement. Beyond monetary compensation to affected investors, the settlement requires Uphold to revise its policies and procedures to better screen and monitor third-party investment products offered through its platform, addressing systemic compliance gaps that enabled the scheme's promotion.
This enforcement action underscores regulatory scrutiny of cryptocurrency platforms' responsibilities in vetting products and protecting retail investors from misleading claims and undisclosed risks.
Between January 2019 and October 2020, Uphold offered CredEarn on its platform and mobile application, marketing it to users as a reliable savings product with attractive interest returns. The Office of the Attorney General's investigation revealed that Uphold's promotional materials misrepresented the underlying investment strategy and risk profile. In reality, Cred generated returns by making risky micro-loans to video game players in China who had low monthly incomes, minimal credit histories, and no access to traditional financing. Uphold's marketing further claimed that CredEarn was protected by "comprehensive insurance"—a protection that did not exist in the cryptocurrency investment industry.
When Cred collapsed in 2020, thousands of Uphold customers worldwide who had invested in CredEarn lost millions of dollars. The $5 million settlement represents more than five times the fees Uphold collected from promoting the fraudulent scheme, demonstrating the scale of investor harm relative to the platform's financial benefit from the arrangement. Beyond monetary compensation to affected investors, the settlement requires Uphold to revise its policies and procedures to better screen and monitor third-party investment products offered through its platform, addressing systemic compliance gaps that enabled the scheme's promotion.
This enforcement action underscores regulatory scrutiny of cryptocurrency platforms' responsibilities in vetting products and protecting retail investors from misleading claims and undisclosed risks.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.