Uphold’s Response to Attorney General’s Claims
Uphold has formally contested the assertions made by the New York Attorney General regarding its settlement of $5 million related to the CredEarn product. In a statement provided to crypto.news, the company claimed that the Attorney General’s remarks distorted crucial information about the circumstances surrounding the settlement.
Allegations and Misrepresentation
Uphold firmly denied allegations that it knowingly endorsed any fraudulent practices by Cred LLC, stating that it was Cred that misled both Uphold and its customers, along with all other users of CredEarn.
The New York Attorney General’s office had charged that Uphold misrepresented the credibility of the CredEarn product, which was promoted as a secure savings option while, in reality, Cred engaged in risky lending activities with customer funds. The settlement agreement highlighted that from 2019 to October 2020, Uphold showcased the CredEarn service across its website and app, attracting investments of approximately $50 million from more than 6,000 users, who later faced over $34 million in losses following Cred’s collapse.
Uphold’s Position and Actions
Uphold maintained that it was not aware of Cred’s financial difficulties until October 2020 and insisted that it was misled regarding the viability of the project. The company reported that as soon as it learned of Cred’s issues, it halted Cred’s access to its platform. CEO Simon McLoughlin expressed dissatisfaction with the Attorney General’s characterization, noting that the U.S. Department of Justice had treated Uphold as a victim in its investigations into Cred’s executives.
Settlement Terms and Future Protections
Although Uphold agreed to the settlement without admitting any fault, it will provide $5 million in restitution to affected customers. The terms of the agreement dictate that Uphold’s claim of approximately $545,190 in the bankruptcy proceedings of Cred will also be redistributed to benefit customers. Furthermore, to enhance future consumer protection, Uphold will implement a thorough risk assessment system for any third-party products it endorses, which will involve checks on a variety of factors including financial records and compliance.
Regulatory Concerns
The Attorney General also highlighted that Uphold promoted the CredEarn product without proper regulatory registrations and failed to adequately disclose significant risks to investors, emphasizing that there was no insurance in place to safeguard retail investors from potential losses, contrary to claims made about Cred’s coverage.
The ongoing discussion hinges on whether it is more appropriate to regard Uphold as an advocate for the CredEarn initiative or as another entity that fell victim to Cred’s alleged deceitful practices.
