New York forces Uphold to pay $5M over its role in promoting the fraudulent CredEarn crypto investment scheme, as announced by Attorney General Letitia James on April 29, 2026. This significant settlement of over $5 million addresses Uphold HQ, Inc.’s misleading promotion of CredEarn as a safe and reliable savings product, which ultimately led to substantial losses for thousands of investors when Cred, LLC collapsed in 2020.
The CredEarn Collapse: A Timeline of Deception
Between January 2019 and October 2020, Uphold prominently featured CredEarn on its platform and mobile application, marketing it as a secure savings product offering attractive annual interest. However, the New York Attorney General’s investigation revealed a starkly different reality. Cred, LLC, the entity behind CredEarn, generated these supposed high returns through risky micro-loans extended to low-income, credit-history-lacking video game players in China, who had no access to traditional financial institutions. This inherently high-risk strategy was concealed from investors.
Adding to the deception, Uphold falsely claimed that CredEarn was protected by “comprehensive insurance.” In reality, no such insurance existed to safeguard retail investors against digital asset investment losses. The investigation further exposed Uphold’s illegal operation, as it promoted CredEarn without registering as a broker or commodity broker-dealer, a clear violation of New York state law.
“Uphold marketed CredEarn as a secure and insured investment, despite knowing the underlying loans were high-risk and no adequate insurance existed. This settlement underscores our commitment to protecting crypto investors from predatory practices.”
Who Was Impacted by the CredEarn Scheme?
The fraudulent scheme orchestrated by Cred, LLC and its CEO Daniel Schatt, and promoted by Uphold, affected a vast number of individuals globally. More than 6,000 Uphold customers invested approximately $50 million through the platform, with investor losses ultimately exceeding $34 million. New York Attorney General Letitia James led the investigation to secure this settlement, aiming to bring justice to these harmed investors.
- New York Attorney General Letitia James: Spearheaded the investigation and settlement.
- Uphold HQ, Inc.: The cryptocurrency platform responsible for promoting CredEarn.
- Cred, LLC and Daniel Schatt: The architects of the fraudulent investment scheme.
- Thousands of Global Investors: Uphold customers who suffered significant financial losses.
The impact of the CredEarn collapse was far-reaching, demonstrating the critical need for robust regulatory oversight in the rapidly evolving crypto market. The underlying risky micro-loans were made to borrowers in China, while the settlement itself was secured in New York, highlighting the global nature of such digital asset investment schemes.
New York Forces Uphold to Pay $5M: Future Implications
The settlement mandates Uphold to pay $5 million to affected customers, which is more than five times the fees it collected from its arrangement with Cred. Furthermore, any funds Uphold recovers from Cred’s ongoing bankruptcy proceedings, where it is owed $545,189, will also be distributed directly to the harmed investors. This action by the New York Attorney General sends a strong message to crypto platforms regarding their responsibility in due diligence and adherence to regulatory requirements.
This outcome not only provides compensation to those who lost money but also seeks to enforce stronger due diligence policies for Uphold concerning third-party investment products. It also emphasizes the necessity for such platforms to properly register as brokers, preventing similar deceptive practices from occurring in the future. The crypto industry is under increasing scrutiny, and this settlement serves as a critical reminder of the legal and ethical obligations platforms have to their users. For more information on crypto regulations, explore our related Crypto news.
