A Colorado pastor and his wife, Eligio “Eli” Regalado and Kaitlyn, face legal action after allegedly arranging a cryptocy scam. The couple raised approximately $3.2 million by selling a crypto token, INDXcoin, marketed to devout Christians.
Colorado’s Securities Commissioner filed a lawsuit against Regalado, accusing them of fraudulent practices and the illegal sale of unregistered securities. Responding to the allegations, a Colorado judge froze the assets of Victorious Grace Church, the online church associated with the crypto token.
According to state filings, the Regalados asserted that INDXcoin was pegged to a cryptocy index and adequately backed. However, the Colorado Securities Commission alleges that the coin had minimal backing, relying primarily on the couple’s claim of divine support.
The pastor insisted that INDXcoin was a utility coin exempt from securities regulations, countering expert opinions by invoking divine guidance. INDXcoin transactions were limited to the Kingdom Wealth Exchange, a platform controlled by the Regalados.
Colorado regulators claim the couple routinely shut down the exchange to avoid a potential bank run. When investors grew concerned about the token’s lack of returns, Eli Regalado reportedly invoked divine guidance, urging them to “HODL” and trust God’s plan.
The Regalados allegedly pocketed $1.3 million from the scheme, using the funds for luxury items and personal expenses. In response to the charges, Eli Regalado admitted to the pocketing but claimed that a portion went to the IRS and a home remodel, guided by the Lord’s instructions. The couple is scheduled for a hearing on January 29, responding to the Colorado Securities Commissioner’s request for a preliminary injunction. Prosecutors will likely argue how the Regalados violated state securities laws, raising the question of whether divine guidance can be used as a defense.