Uphold Faces $5 Million Penalty for Deceptive Crypto Savings Promotion

Misleading Promotion of CredEarn Product

New York regulators have secured more than $5 million from Uphold over its role in promoting a misleading crypto investment product. The action, led by Letitia James, centers on Uphold’s marketing of CredEarn, a yield product offered by Cred LLC and its CEO Daniel Schatt.

Between January 2019 and October 2020, CredEarn was presented as a safe savings product with attractive returns. However, authorities found the returns were generated through risky microloans to low-income video game players in China, many lacking credit history or access to traditional finance.

False Claims and Regulatory Violations

Investigators said Uphold misled users by claiming CredEarn had “comprehensive insurance,” which did not exist. The platform also operated without required broker or commodity broker-dealer registration, adding to compliance concerns.

Cred Collapse and Investor Losses

Cred began suffering losses in March 2020 and filed for bankruptcy months later, leaving thousands of users affected. Under the settlement, Uphold will compensate customers directly and pass on any recovered funds, including approximately $545,189 tied to ongoing proceedings.