Uphold Pays $5 Million for Promoting Fraudulent Crypto Savings Product

The New York Attorney General's office has taken action against Uphold, a cryptocurrency platform, for promoting a fraudulent savings product called CredEarn. The company was found to have failed to disclose the risks associated with the product and made false claims about its insurance coverage.

According to the investigation, CredEarn promised users attractive annual interest rates but was actually generating returns through risky microloans to low-income borrowers in China. This was not disclosed to investors, who were misled into thinking they had comprehensive insurance protection.

The collapse of Cred's financial troubles in 2020 left thousands of Uphold users worldwide unable to recover their investments. The company operated without the required broker or commodity broker-dealer registration, further compounding its legal troubles.

Under the settlement terms, Uphold will pay $5 million directly to affected customers and return any funds recovered from Cred's bankruptcy proceedings. Notifications will be sent to users by email once funds are disbursed.