A Colorado Pastor and His Wife Accused of Defrauding Investors in Crypto Token Scheme
A Colorado pastor and his wife are facing legal action after allegedly deceiving investors and making off with millions of dollars raised through a crypto token marketed to devout Christians. Pastor Eligio “Eli” Regalado and his wife Kaitlyn reportedly raised $3.2 million by selling INDXcoin, a crypto token issued through their online church, Victorious Grace. The Colorado Securities Commissioner has sued the couple for fraud and illegal sale of securities without proper registration. The state alleges that the Regalados falsely claimed that INDXcoin was backed by an index of cryptocurrencies when it was actually backed by nothing but faith.
The Regalados’ Claim of a Utility Coin Exemption
The Regalados insisted that INDXcoin was not a security offering but a utility coin, exempt from securities regulations. However, experts disagreed and told them that it was indeed a security offering. The couple invoked God’s authority to support their claim, saying that God deemed it a utility coin. INDXcoin could only be exchanged for USD through the couple’s platform, Kingdom Wealth Exchange, which they routinely shut down to avoid a bank run.
God’s Instructions: HODL and Stay Invested
When investors grew skeptical due to the lack of returns on INDXcoin, Eli Regalado told them that God instructed him to tell everyone to hold onto their investments and stay with INDXcoin. The couple eventually shut down Kingdom Wealth Exchange, claiming insufficient active users, but informed INDXcoin holders that God had commanded them to stay invested and not ask questions.
Fraudulent Activities and Personal Expenses
During the fundraising process, the Regalados allegedly pocketed $1.3 million, which they spent on luxury items and experiences. They used the funds for handbags, cosmetic dentistry, snowmobile adventures, an au pair, home renovations, and luxury vacations. Decrypt reached out to the couple for comment but did not receive a response.
Public Response and Legal Proceedings
In a video posted on the INDXcoin community site, Eli Regalado admitted to pocketing $1.3 million but stated that half a million went to the IRS and a few hundred thousand dollars were used for a home remodel instructed by God. The Regalados will face a hearing on January 29 regarding the Colorado Securities Commissioner’s request for a preliminary injunction.
Hot Take: God’s Word as Backing for Cryptocurrencies?
The case of the Colorado pastor and his wife raises questions about the intersection of faith and finance. While they claimed that their crypto token was backed by God’s word, regulators argue that it was backed by nothing substantial. The outcome of this legal battle will determine if investors can be swayed by claims of divine guidance in cryptocurrency ventures.
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