Colorado Pastor Attributes $3.2M Crypto Scam to God’s Command, Faces Lawsuit with Wife

A Colorado pastor and his wife find themselves in a lawsuit after allegedly launching a scheme that raised $3.2 million through a crypto token called INDXcoin. Pastor Eligio “Eli” Regalado and his wife Kaitlyn, who operated through the online church Victorious Grace, are now facing charges of fraud and the illegal sale of unregistered securities.

The Colorado Securities Commissioner filed a lawsuit against the couple, accusing them of deceptive practices and the unauthorized sale of securities. The state alleges that the Regalados marketed INDXcoin as a crypto token pegged to a cryptocurrency index, backed by sufficient assets. However, according to the authorities, the coin had virtually no backing apart from the couple’s claim of divine guidance.

From the outset, the Regalados insisted that INDXcoin was not a security but a utility coin, exempt from securities regulations. When experts contradicted this claim, the couple purportedly invoked divine guidance, asserting that God deemed INDXcoin a utility coin. In a forum post, Eli Regalado stated

“[They said] what Eli and Kaitlyn are doing is a security, but God says, ‘No, it’s a utility coin.’”

Eli Regalado

INDXcoin could only be exchanged for USD through Kingdom Wealth Exchange, a platform controlled by the Regalados. State regulators claim that the couple routinely shut down the platform to avoid a bank run.

When investors questioned the lack of returns, Eli Regalado allegedly attributed it to divine instructions, telling them to HODL.

After $INDX coin goes live… everybody who purchases $1000 or more worth of $INDX coin on the exchange will receive one! pic.twitter.com/kg6dMOWd5H

— INDXcoin (@indxcoin) February 7, 2023

Colorado Pastor Misuse of Funds and Admission of Guilt

The lawsuit asserts that out of the $3.2 million raised, the Regalados pocketed $1.3 million, using it for luxury items, vacations, and home renovations. Eli Regalado publicly admitted to the charges in a video posted on the INDXcoin community site. He acknowledged the $1.3 million misappropriation but claimed that half a million went to the IRS, and the rest was spent on a home remodel, divinely inspired.

The Regalados are set to face a hearing on January 29 regarding the Colorado Securities Commissioner’s request for a preliminary injunction. It remains to be seen how state officials will prove the violation of securities laws and whether the defense’s claim of divine guidance will hold in court.