New York Attorney General Letitia James Secured more than $5 million from cryptocurrency trading platform Support HQ Inc. In a settlement that resolved allegations that the company misled customers by heavily promoting a third-party yield product that ultimately collapsed and led to significant investor losses. The agreement, announced on April 29, 2026not to the exporter of the failed product, invest It is a platform that facilitates distribution to users.
According to the investigation by the Attorney General’s Office, Uphold integrated and aggressively marketed CredEarn, a cryptocurrency lending program developed by Cred LLC and its then-CEO. Daniel Shadow— From January 2019 to October 2020 via its website and mobile app.
The platform portrayed CredEarn as a simple, low-risk savings tool that allows users to earn attractive annual interest rates on their digital assets.
Promotional materials touted it as a “revolutionary savings product” available only through Uphold, drawing comparisons to traditional banking options and highlighting default security measures.
In effect, Cred channeled the pooled funds into high-risk microloans to video game enthusiasts in China, many of whom had limited income, no formal credit records, and little access to traditional banking.
Uphold also cited “comprehensive insurance” coverage for assets, although there is no such protection in the industry to protect retail investors against losses. digital holdings.
When Cred faced increasing losses due to its lending practices and bankruptcy In November 2020, more than 6,000 Uphold customers worldwide suffered total losses exceeding $34 million on investments of approximately $50 million.
Under the terms of the Discontinuance Trust, Uphold will distribute $5 million directly to affected investors; That’s more than five times the fees the company earned from regulation.
Any additional recovery Support Proceeds from ongoing bankruptcy proceedings, in which Cred has unsecured claims of approximately $545,000, will also be transferred to injured customers.
The company must develop internal due diligence procedures and be formally registered as a broker to evaluate and recommend third-party investment proposals. Attorney GeneralOffice. These steps aim to prevent similar problems from progressing.
Attorney General James emphasized the importance of accountability in the digital asset space. “Uphold encouraged risky investments and misled its customers into believing they were safe,” he said. “Investors should be able to trust the industry advice they receive.”
residential It does not require Uphold to admit any liability, but instead admits the actual records while resolving the investigation without the need for further litigation.
In response, Support He issued a statement objecting to certain aspects of the Attorney General’s public account of events.
The company maintained that it was deceived by Cred’s actions and took immediate action to protect customers when problems arose.
CEO Simon McLoughlin described the firm as a victim of third-party fraud rather than a knowing participant.
This underscores the increasing regulatory focus on intermediaries in the cryptocurrency ecosystem.
By targeting platforms By promoting foreign return products without proper registration or adequate review, New York officials are signaling that due diligence and transparency are non-negotiable, even for companies that do not make investments directly.
Industry professionals note that this could impact the way other crypto services evaluate partnerships and communicate risks to users. Residential provides Partial refunds will be issued to approximately 2,200 eligible investors identified by the Attorney General’s Office, and funds are expected to arrive in accounts via direct deposit or approved stablecoins. This reinforces James’ office’s broader efforts to ensure security New Yorkers from losses related to digital assets. But his actual understanding of these innovations is questionable, and his approach does not always represent the most logical or practical course of action.
