- Advertising Cred’s CredEarn product, which investors lost money on, will cost Uphold $5 million.
- Additionally, as part of the agreement with the New York Attorney General’s Office, the platform will pay victims approximately $550,000, which it will receive as a result of Cred’s bankruptcy.
New York Attorney General Letitia James has achieved Payments of more than $5 million from the cryptocurrency platform Uphold for assistance in promoting a fraudulent investment product.
The product in question is CredEarn, a product from Cred, LLC, which was advertised on Uphold from January 2019 to October 2020, along with a mobile app, as a safe and secure savings offering with attractive annual interest rates.
As part of the campaign, Uphold failed to disclose to customers that Cred made these profits by providing microloans to low-income video game players in China, who were typically borrowers with no credit history and no access to traditional financial institutions.
Uphold also claimed that Cred had “comprehensive insurance,” which the Attorney General’s Office found to be false. At the time, there was no insurance in the industry protecting retail investors from losses related to digital assets. To top it all off, Uphold operated without the required registration as a broker or commodity broker-dealer.
In March 2020, Cred began to suffer losses due to risky lending practices and filed for bankruptcy eight months later, leaving thousands of Uphold customers worldwide in dire straits.
As part of the agreement, Uphold will pay $5 million directly to affected clients, more than five times the amount of fees received under the agreement. Any funds Uphold receives from the bankruptcy of Cred, where it is owed $545,189, will also go to investors. They will be notified by email when the funds are deposited into their accounts.
Investors should trust the industry advice they receive, James said, and my office will always work to ensure that bad actors are held accountable for jeopardizing the financial security of their clients.
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