Same Judge Who Ruled in Favor of Ripple Hands Down Sentence in $8.4 Million Crypto Ponzi

The judge who rattled the crypto industry with her game-changing XRP ruling is making headlines again. Judge Analisa Torres, whose landmark decision that retail XRP sales weren't securities, sentenced a crypto Ponzi scheme promoter to 30 months in prison Thursday for defrauding investors of $8.4 million.

The sentence comes just days after the SEC filed an appeal brief challenging Torres' earlier ruling that distinguished between institutional and retail sales of XRP, establishing how certain tokens are not inherently securities when sold to retail investors on exchanges.

Torres’ 2024 ruling sent shockwaves through the industry. Now, another key case rife with political drama is on the line.

In the sentencing, Judge Torres described how Hernandez "sold valueless coins" while pointing to evidence that suggests Hernandez' continued involvement in similar schemes.

The sentencing follows Hernandez's guilty plea to conspiracy to commit wire fraud charges from July last year after charges were first forwarded by the SEC in 2022.

"There is some evidence she's done it since," Judge Torres said before delivering the sentence, referencing prosecutors' claims that Hernandez had participated in multiple cryptocurrency investment schemes.

Hernandez worked with co-conspirators between 2017 and 2021 to promote Forcount's fraudulent crypto trading and mining operations, according to a sealed indictment detailing their role in generating "excitement [...] in order to recruit victims into the scheme."

The scheme promised investors they would double their investments within six months through guaranteed returns.

"Ms. Hernandez, when complained to, told victims to come to the next scheme," the prosecutor told the court, describing how she directed disappointed investors toward other fraudulent opportunities.

Hernandez was reportedly confronted at LaGuardia Airport in New York City, after which she deleted transaction records on her phone.

The sentencing sheds light on the schemes' impact on victims, with one investor telling the court they lost their retirement savings and marriage due to the fraud. Victims also reported feeling particularly vulnerable due to their immigration status.

"The victims were terrified, many were undocumented with the new Administration," a court transcript from Inner City Press details, quoting an assistant U.S. attorney.

Leadership changes in Manhattan’s top court

The sentence comes amid leadership changes at the Southern District of New York, following the departure of U.S. Attorney Damian Williams in December.

Williams led the prosecution in high-profile cases leading to the imprisonment of figures such as disgraced FTX founder Sam Bankman-Fried and Ghislaine Maxwell, Jeffrey Epstein's accomplice. Williams also worked on the case against the rapper Sean “Diddy” Combs, who currently awaits trial.

Former SEC Chair Jay Clayton has been nominated by President Donald Trump as William’s replacement, signaling a potential shift in the office's approach to crypto-related crime prosecution. Clayton awaits Senate confirmation for the role.

The Forcount case has resulted in multiple related convictions, with senior promoter Juan Tacuri receiving a 20-year sentence in October 2024.

The scheme's founder, Francisley Da Silva, remains in custody in Brazil.

Edited by Stacy Elliott.