New York Attorney General Letitia James reached a $5 million settlement with crypto platform Uphold over its role in promoting a crypto yield product called CredEarn, which funneled roughly $50 million in customer funds to a company that later collapsed into bankruptcy.
What the New York AG settlement with Uphold includes
The April 29, 2026 enforcement action centers on Uphold’s promotion of CredEarn, a yield-generating product operated by Cred LLC. Under the signed Assurance of Discontinuance, Uphold must pay $5,000,000 in damages to reimburse affected investors.
Between 2019 and October 2020, over 6,000 Uphold customers invested approximately $50 million worth of cryptocurrency into CredEarn through the platform. Investor losses exceeded $34 million after Cred filed for bankruptcy in late 2020.
The agreement also requires Uphold to pass through any initial distribution from its $545,189.97 unsecured claim in Cred’s bankruptcy to the investor reimbursement pool. The settlement is not framed as an admission of liability by Uphold.
The Office of the Attorney General found that Uphold acted as both a broker and commodity broker-dealer under New York law and failed to register with the state. Cred’s Enhanced Yield Agreements were classified as investment contracts and securities under New York’s Martin Act.
Why the crypto yield product drew regulatory scrutiny
CredEarn offered Uphold customers interest-like returns on deposited cryptocurrency, a structure common among crypto yield products that gained popularity before a wave of collapses in 2022. The OAG’s case hinged on the argument that Uphold marketed CredEarn without performing adequate due diligence on Cred’s financial health or business model.
The settlement requires Uphold to institute and maintain a risk-based due diligence process before recommending third-party products to customers going forward. This obligation goes beyond a one-time penalty, imposing ongoing compliance infrastructure similar to requirements that have followed other enforcement actions tied to crypto intermediaries.
Attorney General James stated directly: “Investors should be able to trust the industry advice they receive.” The remark frames the case as a consumer protection matter rather than a broad crackdown on crypto.
“Investors should be able to trust the industry advice they receive.”
— Letitia James, New York Attorney General
Uphold CEO Simon McLoughlin pushed back in a post-settlement statement, saying the company “was a victim of Cred’s deception,” according to a GlobeNewswire release from Uphold. The company also claimed the U.S. Department of Justice identified Uphold as a victim in its criminal prosecution of Cred executives, though that claim has not been independently verified.
What the settlement means for Uphold, users, and the crypto market
For Uphold, the financial impact extends beyond the settlement payment itself. The mandated due diligence process adds permanent compliance costs, and the reputational effect of a state AG enforcement action may weigh on partnership and licensing discussions. The case echoes the kind of intermediary liability questions that have surfaced in broader conversations about how crypto platforms vet the products they promote.
For the more than 6,000 affected customers, the reimbursement pool offers partial recovery. The $5 million payment plus any bankruptcy distributions will be allocated toward losses that exceeded $34 million, meaning most investors will recover only a fraction of their original deposits.
The broader signal is directed at other crypto platforms that offer or promote yield-generating products through third-party providers. New York’s use of the Martin Act, which does not require proof of intent to defraud, gives the AG’s office a lower bar for enforcement than federal securities law typically demands. Platforms operating in New York or serving New York residents now face a clear precedent: promoting a third-party crypto yield product without proper registration and due diligence can trigger state-level enforcement, even years after the underlying product has failed.
The settlement comes amid a period of intensifying regulatory attention on crypto intermediaries globally, with state and federal authorities increasingly scrutinizing the role platforms play in connecting users to risky financial products.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
