This time, the judge who shook up crypto with her game-changing XRP verdict is in the spotlight. 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.
The 2024 decision by Torres sent shockwaves throughout the industry. Another key case, rife in political drama, is now on the line.
The Judge Torres described Hernandez’s crimes in the sentence. "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."
Guaranteed returns promised to double the investors’ investment in six months.
"Ms. Hernandez, when complained to, told victims to come to the next scheme," As she told the court about how disappointed investors were directed to other fraudulent opportunities, the prosecutor was able to convince the jury.
Hernandez was confronted by a security guard at LaGuardia Airport, New York City. She then deleted all transaction records from her mobile 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. The victims also felt particularly vulnerable because of their immigration status.
"The victims were terrified, many were undocumented with the new Administration," Inner City Press, quoting a U.S. assistant attorney in court, provides details.
Manhattan’s highest court faces a new leadership
It comes after the departure of U.S. Atty. Damian Williams from the Southern District of New York 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 was also involved in the prosecution of the rapper Sean “Diddy” Combs who is awaiting 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’s confirmation is still pending by the Senate.
Juan Tacuri is the top promoter of Forcount and he will be sentenced to 20 years imprisonment in October 2020.
The scheme's founder, Francisley Da Silva, remains in custody in Brazil.
Stacy Elliott edited this article.