Uphold Pays US$5M Over Collapsed CredEarn Crypto Scheme

• Uphold will pay over US$5 million (AU$7 million) after promoting CredEarn, which regulators found misled investors about risk and safety.
• Thousands of users lost millions after funds were channelled into unsecured microloans to borrowers with no credit history.
• The case sets a precedent placing responsibility on platforms that market third-party crypto yield products.

Uphold has agreed to pay more than US$5 million (AU$7 million) after a settlement secured by New York Attorney General Letitia James over its promotion of the failed CredEarn investment product. The case, brought under New York’s Martin Act, found that the platform misled users by presenting CredEarn as a safe, savings-style product without clearly disclosing how returns were generated. 

Investigators determined that the yield came from high-risk lending activity, including uncollateralised microloans to low-income borrowers in China who had no credit histories. Uphold also repeated claims that the product was backed by “comprehensive insurance,” despite no such protection existing for retail crypto investors at the time.

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Investor Losses Unfold 

Between 2019 and 2020, more than 6,000 customers invested approximately US$50 million (AU$70 million) into CredEarn through Uphold. When Cred filed for bankruptcy in November 2020, those investors collectively lost more than US$34 million (AU$47.6 million). 

The broader bankruptcy proceedings generated over 6,000 claims totalling US$140 million (AU$196 million), with valuations later exceeding US$1 billion (AU$1.4 billion) based on market prices.

Under the settlement, Uphold will distribute the US$5 million (AU$7 million) payment to affected users and pass on any recoveries from Cred’s bankruptcy, including US$545,189 (AU$763,265) owed to the platform. 

The agreement also requires the company to strengthen due diligence processes and register with regulators before promoting similar third-party products. Regulators said the case establishes a precedent that increases accountability for platforms marketing external yield products.

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