Sandoval v. Uphold HQ Inc.

OPINION & ORDER This is a putative consumer class action filed by Plaintiffs Addison Sandoval (“Sandoval”), Lionel Ducote (“Ducote”), Nicholas King (“King”), and Richard Neal (“Neal”) (collectively, “Plaintiffs”), alleging that Defendant Uphold HQ, Inc. (“Uphold”) misled customers like Plaintiffs through various marketing practices that caused Plaintiffs to invest in a cryptocurrency product that ultimately lost all its value. Before me is Uphold’s motion to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(6). Because I find that Plaintiffs have failed to allege that Uphold engaged in a deceptive practice within the meaning of applicable law, Uphold’s motion to dismiss is GRANTED. I. Factual Background¹ A. Uphold, the “Earn” Product, and Cred Uphold is a South Carolina corporation with its “headquarters located at 6 West 18th Street, 3rd Floor, New York, New York 10011.” (FAC 19.) Uphold markets itself as a “digital money platform” that allows its customers to “transact in fiat currencies, cryptocurrencies, and precious metals.” (Id.

23-24.) Its “stated goal is to bring cryptocurrency products to the mass consumer market.” (Id. 1.) In late 2018, Uphold announced it would offer a financial product called “Uphold Earn.” (Id. 28.) Its press releases indicated that the “Earn” product would work in conjunction with what it referred to as a “U.S. Dollar Stablecoin (Universal Dollar), a fully-transparent, digital asset that is backed 1-to-1 with U.S. dollars to be held at U.S. domiciled, FDIC-insured banks.” (Id. 29.)² Uphold’s 2018 press release stated that Uphold “customers who purchase the Universal Dollar can opt-in to Uphold Earn, which functions much like a traditional banking product, and can receive attractive and competitive rates, currently as high as five percent.” (Id. 30 (emphasis removed).) Uphold referred to Earn — or some variant of Earn, such as “Start Earning” — in marketing materials that touted Uphold customers would have the option to “earn interest on digital assets,” such as in the below marketing image: (Id.