The New York Attorney General’s (AG) Office announced a $5 million settlement with Uphold HQ Inc. (Uphold), a cryptocurrency platform that allows users to buy, sell, and trade digital assets. The settlement resolves allegations that Uphold misleadingly promoted Cred Inc.’s now‑bankrupt investment product, CredEarn, to its customers as a safe, savings‑style vehicle.

According to AG Letitia James, Uphold marketed CredEarn on its website, app, and in email campaigns between 2019 and October 2020 that involved high-risk crypto lending that the AG claims led to investor losses. According to the AG, Uphold described CredEarn as an exclusive, “revolutionary savings product” and highlighted yields of up to 10% on digital assets, comparing CredEarn favorably to traditional financial institutions. Thousands of Uphold customers invested through the platform, with more than $50 million in cryptocurrency flowing into CredEarn.

The AG claimed that these promotions did not align with the product’s actual risk profile. Cred deployed investor funds through a Chinese micro‑lender, MoKredit, which extended small, short‑term, uncollateralized loans — often at interest rates allegedly exceeding 35% — to video game players with low incomes, no credit histories, and no access to traditional credit. The AG concluded that Uphold did not adequately disclose that CredEarn’s returns depended on this kind of speculative lending, even as it positioned the product as a safe and reliable way to earn interest.

The settlement also targets statements about insurance and investor protection. The AG claimed that Uphold touted Cred as having “some of the most comprehensive insurance offered in the crypto lending sector.” Cred further told investors that it had “comprehensive insurance and security policies to protect your digital assets.” According to the AG, there was no insurance that would protect investors from the investment losses that later occurred.

In addition, the AG determined that Cred’s Enhanced Yield Agreements were investment contracts and securities under New York’s Martin Act, and that digital assets qualify as commodities. By offering CredEarn on its platform, facilitating transactions, and receiving fees from Cred, Uphold was acting as both a broker and a commodity broker‑dealer in New York. The AG found that Uphold failed to register in those capacities and did not qualify for an exemption, making its conduct allegedly a violation of the Martin Act and Executive Law § 63(12).

Key Terms of the Settlement

Under the Assurance of Discontinuance, Uphold agrees to the following key relief:

  • Monetary Relief for Investors: Uphold agreed to pay $5 million to customers who suffered losses relating to CredEarn. In addition, the settlement requires that any initial distribution Uphold receives on its approximately $545,000 general unsecured claim in Cred’s bankruptcy will be added to the settlement pool for affected investors.
  • Reimbursement Process: Uphold will create a segregated reimbursement account, identify eligible investors in coordination with the AG, and notify them via email of their right to receive reimbursement. Eligible investors will be able to accept funds through their Uphold accounts and withdraw those funds for a set period without fees.
  • Registration and Restrictions: Uphold agreed it will no longer offer or sell unregistered, nonexempt securities or commodities, including digital assets, within or from New York unless it complies with state broker and commodity broker‑dealer registration requirements.

Why It Matters

This settlement reinforces several themes in state attorneys general enforcement actions in the digital asset space:

  • Retail‑facing crypto products are under a consumer‑protection lens. When platforms market yield‑generating products as “savings” or “safe” alternatives, regulators will examine whether the marketing accurately reflects the true risk profile and underlying strategy.
  • Insurance and safety claims carry heightened risk. Statements suggesting that investors’ digital assets are “protected” or “comprehensively insured” are likely to be scrutinized, especially where investment‑loss insurance does not exist or cover losses.
  • Platforms are responsible for partner diligence. Firms that feature or recommend third‑party products should not rely on their partners’ descriptions. Robust, documented due diligence — particularly around risk management, conflicts of interest, and deployment of investor funds — is increasingly an expectation.
  • State registration obligations are central. As states treat many digital asset products as securities or commodities, platforms must carefully assess whether their activities trigger broker or commodity broker‑dealer registration requirements under state law.

For crypto platforms and other intermediaries, the Uphold settlement is a reminder that state attorneys general will continue to leverage laws like the Martin Act to police marketing, disclosure, and registration practices — especially when regulators perceive significant undisclosed risk to retail investors.

Troutman Pepper Locke State Attorneys General Team

Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
Clay Friedman – Co-leader
Clay co-leads the firm’s State Attorneys General practice and is nationally ranked by Chambers USA for AG Government Relations and in Best Lawyers for Advertising Law. He has dedicated his entire career to state attorney general and federal work, serving for nearly a decade in a senior role and more than 25+ years in private practice. Clay focuses his practice on helping industry-leading companies mitigate the risks associated with state and federal regulatory investigations and associated litigation.
Chris Carlson
Chris advises clients on regulatory, civil, and criminal investigations and litigation. With a background as an assistant attorney general, he provides practical guidance to clients with matters involving state attorneys general and federal regulatory agencies.
Lauren Fincher
Lauren has vast experience handling state attorneys general investigations, navigating complex regulatory compliance matters, and providing strategic counsel in enforcement actions across various industries. She helps clients manage high-stakes regulatory matters and guides them through complex legal landscapes.
Stephen Piepgrass
Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, representing clients in single and multistate enforcement actions, including inquiries and investigations, as well as litigation involving state attorneys general and other state and federal governmental enforcement bodies. He has significant experience handling actions with federal agencies, including the CFPB and FTC, as well as single plaintiff and class action litigation for clients in highly regulated sectors such as financial services, health care, pharmaceutical, and education.
Michael Yaghi
Mike handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
Matthew J. Berns
Drawing on his experience in senior leadership roles in the New Jersey Attorney General’s and Governor’s Offices and as a trial attorney for the U.S. Department of Justice, Matt provides an insider’s perspective when guiding clients through complex government investigations, litigation, and other actions.
Samuel E. “Gene” Fishel
Gene is a former regulator with two decades of experience who has overseen state privacy and cybersecurity regulation enforcement, led national, multistate attorneys general privacy investigations, and prosecuted computer crimes at the state and federal levels. He has served at the forefront of state attorney general and federal enforcement, and utilizes this experience to proficiently represent client interests.
Jeff Johnson
Jeff helps clients navigate complex regulatory and litigation challenges with local, state, and federal authorities. His clients benefit from his decade of broad litigation experience, understanding of emerging state and federal regulatory issues, and strong relationships with attorneys general across the U.S. In addition to handling cases from trial through state or federal appeals, Jeff serves as amicus counsel in advancing legal rules to support his clients’ vital interests.
Jay Myers
Jay assists clients in heavily regulated industries, including health care, energy, insurance, emerging industries, and data privacy. He provides both regulatory legal advice and government relations strategies. Jay’s past and current clients include Fortune 10 companies, startups, nonprofits, industry associations, and advocacy groups. Recognizing that state government matters are often complex and multifaceted, he utilizes regulatory guidance, government advocacy, or both in tandem to deliver tailored solutions for each client’s unique needs.
Zoe Schloss
Zoe represents clients in litigation and government investigations. As former deputy attorney general for the Delaware Department of Justice, she is an experienced litigator who understands the enforcement priorities that impact her clients. Zoe works with individuals and corporate entities in highly regulated industries, including financial services, health care, and energy.
Jessica Birdsong
 Jessica is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, magna cum laude, where she served as associate articles editor of the Journal of Law & Technology.
Troy Homesley
Troy is an accomplished litigator who has represented and defended clients across a wide range of complex, high-stakes disputes at both the trial and appellate levels. He has represented technology companies, business executives, law firms, investment funds, high-ranking federal officials, international non-profits, and asylum seekers. Troy draws on his broad litigation experience to advise clients before litigation arises, while claims are pending or threatened, and leading up to and through trial and appeals.
Namrata Kang
Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. Nam’s experience transcends multiple industries, including financial services, telecommunications, media, and sports betting.
Michael Lafleur
Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
William LaRosa
Bill represents clients in complex regulatory investigations, state attorneys general matters, and enforcement proceedings, drawing on his experience as a former assistant U.S. attorney and private sector litigator in high stakes, multistate AG and regulatory matters.
Philip Nickerson
Philip represents clients in sectors such as financial, tech, real estate, and energy in a range of litigation matters. He is experienced in matters involving trade secrets, government investigations, commercial contracts, construction and product defect.
Lane Page
Lane specializes in federal and state regulatory investigations and complex civil litigation. He focuses on representing financial institutions and other businesses, with a particular emphasis on consumer protection and fair lending issues.
Dascher Pasco
Dascher is an attorney within the Regulatory Investigations, Strategy, and Enforcement practice, based in the Richmond office. She joined our firm after working in personal injury and medical malpractice for a Virginia trial law firm. Dascher brings varied legal experience to the firm with strong litigation and regulatory strategy capabilities.
Kyara Rivera Rivera
Kyara is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, cum laude, where she served as publications and online editor of the Public Interest Law Review.
Timothy Shyu
Timothy is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group.
Trey Smith
Trey focuses his practice on representing and advising regulated utilities before state public utility commissions. He routinely helps clients obtain certificates of public convenience and necessity for transmission infrastructure. In this role, Trey works with his clients’ subject-matter experts to manage administrative proceedings, including by preparing initial filings; responding to discovery requests; drafting rebuttal testimony; and litigating any disputed issues.
Daniel Waltz
Dan helps clients navigate all aspects highly regulated relationships between industry participants and federal, state and local governments. Whether engaging with regulators, negotiating transactions or representing clients in the courtroom, he delivers solutions that help his clients achieve their strategic goals.
Stephanie Kozol
Stephanie is Troutman Pepper Locke’s senior government relations manager in the state attorneys general department.