NY AG Secures $5M Settlement with Uphold Over CredEarn Yield Promotion

New York Attorney General Letitia James secured more than $5 million from crypto platform Uphold over its promotion of CredEarn, a third-party yield product that collapsed when its operator Cred LLC filed for bankruptcy in November 2020, according to the attorney general’s office.

Settlement and Scheme Details

The settlement takes the form of an Assurance of Discontinuance under New York’s Martin Act. Uphold admitted the attorney general’s factual findings without admitting liability.

James’s office found that Uphold marketed CredEarn as a safe, savings-like product while failing to disclose the source of its yields. Cred generated returns by funneling customer crypto through a Chinese microlender, MoKredit, that made uncollateralized, two-week loans to low-income video game players with no credit histories. Some loans were as small as $1.45.

Uphold also relayed Cred’s claim that it carried “comprehensive insurance.” No insurance product in the industry at the time covered retail investors against digital asset investment losses, according to the settlement.

More than 6,000 Uphold customers invested roughly $50 million into CredEarn through the platform. When Cred collapsed, those investors lost more than $34 million. Cred’s bankruptcy generated more than 6,000 claims totaling $140 million, valued at more than $1 billion at August 2025 crypto prices, according to the Department of Justice.

The $5 million payment is more than five times the fees Uphold collected from hosting the product. Uphold must also hand over any recovery from Cred’s bankruptcy, in which it is owed $545,189.

Uphold’s Response

Uphold CEO Simon McLoughlin said the attorney general’s office misrepresented the facts and that the settlement contains no allegation Uphold knowingly promoted a fraudulent scheme.

“The U.S. Department of Justice, in its criminal investigation of Cred, correctly found that Uphold was a victim of Cred and was not in any way to blame for that company’s actions,” McLoughlin said in a statement.

Uphold said it froze Cred’s platform access within hours of learning about the losses in October 2020 and demanded Cred self-report to regulators. Only 21 of the affected investors were New York residents, according to an Uphold spokesperson.

The settlement notes that Cred CEO Daniel Schatt “later became a director of Uphold.” According to the federal indictment, Schatt joined the board of the crypto exchange that hosted CredEarn in April 2018. Uphold told American Banker that Schatt sat on the board of a separate entity, Uphold Ltd., and that Cred operated independently at arm’s length.

Schatt and Cred CFO Joseph Podulka pleaded guilty to wire fraud conspiracy in May 2025. A federal judge sentenced Schatt to 52 months and Podulka to 36 months in August 2025. The indictment alleges that by January 2020, Cred had lent MoKredit roughly $40 million, representing about 80% of its assets, and that after the March 2020 bitcoin crash, the company used new customer deposits to pay prior redemptions.

Regulatory Implications and Enforcement Precedent

The settlement breaks new ground by targeting the distribution layer of a crypto yield product rather than its issuer. The attorney general’s office found Uphold acted as an unregistered broker and commodity broker-dealer under New York’s General Business Law.

This extends the legal theory behind the SEC’s $100 million settlement with BlockFi in 2022, which targeted BlockFi as the issuer of unregistered securities. Here, New York is targeting the promoter.

James’s office has built a growing crypto enforcement record under the Martin Act, including a $2 billion settlement with Genesis Global Capital in May 2024 and a $50 million settlement with Gemini in June 2024.

The settlement requires Uphold to implement a formal due diligence process for vetting third-party products, including review of audited financials, insurance policies, compliance controls and interviews with independent third parties such as auditors and competitors.

According to reporting in June 2025, Uphold’s board appointed FT Partners to explore a potential U.S. IPO at a valuation north of $1.5 billion. Uphold does not currently serve New York customers and has filed a BitLicense application with the state’s Department of Financial Services.