LUCKNOW (CoinChapter.com) — A Colorado pastor, Eligio “Eli” Regalado, and his wife, Kaitlyn, face legal trouble after allegedly defrauding crypto investors. They raised over $3.2 million through the sale of cryptocurrency INDXcoin. The couple claimed that they created INDXcoin based on instructions from God himself.
Divine Coin or Deceit?
Regalado is the pastor of an online church, Victorious Grace. Through this church, the Regalados issued and promoted INDXcoin as a cryptocurrency token allegedly pegged to an index of other cryptocurrencies and backed by sufficient assets to maintain its value.
However, Colorado’s Securities Commissioner filed a lawsuit this week alleging the couple had engaged in securities fraud. They illegally sold unregistered securities and deceived investors in the process. On Thursday, a Colorado judge agreed to freeze the assets of Victorious Grace Church.
According to the state’s legal complaint, INDXcoin was backed by almost no actual assets, despite the Regalados’ claims.
“Defendant Eli leveraged the potential investors’ faith,” the complaint stated. “He stated that the success of their investments was guaranteed by God.”
The Regalados had insisted from the beginning that INDXcoin was a utility token rather than a security. However, when experts advised them that it would legally be considered a security and subject to regulations, Regalado allegedly invoked divine authority. “God says, ‘No, it’s a utility coin,'” he wrote online to INDXcoin investors.
God Says, ‘Stay In INDXcoins’
INDXcoin could only be exchanged for US dollars on the Kingdom Wealth Exchange, a platform also controlled by the Regalados. Last year, the Regalados shuttered the Kingdom Wealth Exchange. The couple claimed they were forced to close the exchange due to a lack of takers.
According to regulators, the couple frequently suspended trading on this exchange to prevent bank runs. When investors considered cashing out their coins, Regalado allegedly claimed GodGodstructed everyone to keep their investments in INDXcoin.
“Defendant further told investors that God was Godling him to tell investors to “[s]tay where you’re at. Stay in INDXcoins. Stay with where I’m telling you to go. I’m going to make a way,” the complaint said.
Ultimately, the pastor raised over $3 million selling INDXcoin but pocketed $1.3 million for themselves. They allegedly spent this money on luxury items like designer handbags, expensive vacations, home renovations, and an au pair for their children.
Confession Amidst the Chaos
In a video statement after the asset freeze, Regalado admitted to spending $1.3 million.
“The charges are that Kaitlyn and I pocketed $1.3 million, and I just wanted to come out and say that those charges are true. But out of that $1.3 [million], half a million dollars went to the IRS, and a few hundred thousand dollars went to a home remodel that the Lord told us to do.”
He also said that when God first instructed him to create INDXcoin, he had doubts about INDXcoin’s viability. According to the pastor, God responded to his concern: “Trust me.”
The Colorado Securities Commissioner has requested a preliminary injunction against the couple, with a hearing scheduled for Jan. 29. Prosecutors will likely present further evidence of alleged violations of securities laws. However, they may struggle to disprove the pastor’s divine justifications for creating INDXcoin. The case tests financial regulations against individuals’ religious rights and claims of carrying out God’s work.
