A Colorado pastor and his wife are facing legal repercussions for allegedly misappropriating around $3.2 million raised through a cryptocurrency token marketed to the Christian community. Eligio “Eli” Regalado and his wife Kaitlyn, associated with the Victorious Grace Church, issued the INDXcoin through an online platform linked to their church.
Colorado files lawsuit against the Regalados
The Colorado Securities Commissioner has filed a lawsuit against the Regalados, accusing them of fraudulent activities and the illegal sale of securities without proper registration. In response to these allegations, a Colorado judge has frozen the assets of Victorious Grace Church. Legal filings by the state assert that the Regalados presented INDXcoin as being linked to a cryptocurrency index, with sufficient assets to secure this connection. However, the Securities Commission contends that the coin was essentially backed by very little, primarily relying on the concept of divine assurance.
The complaint alleges that Eli Regalado exploited the faith of investors, assuring them that the success of their investments was guaranteed by God. The Regalados consistently asserted that INDXcoin was a utility coin, not a security offering, and therefore exempt from securities regulations. When experts disputed this claim and categorized INDXcoin as a security offering, the couple purportedly invoked a higher power, insisting that God deemed it a utility coin. The only means of exchanging INDXcoin for USD was through Kingdom Wealth Exchange, a platform controlled by the Regalados.
Divine defense and luxurious spendings
Colorado regulators assert that the couple routinely shut down this platform to prevent a bank run when investors grew wary of the coin’s lack of returns. Eli Regalado reportedly told investors, who were considering cashing out, that God instructed them to HODL (Hold On for Dear Life). The complaint details that Eli Regalado informed investors that God directed him to advise them 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.” When Kingdom Wealth Exchange was eventually closed due to insufficient active participants, the Regalados informed INDXcoin holders that God instructed them to stay invested in the coin without questioning.
Throughout the fundraising, the Regalados allegedly pocketed $1.3 million, utilizing the funds for luxury items such as handbags, cosmetic dentistry, snowmobile adventures, an au pair, home renovations, and extravagant vacations. In a video addressing the situation, Eli Regalado admitted to the charges but stated that part of the money went to the IRS and home renovations, both allegedly guided by God. The Regalados are set to face a hearing on January 29 concerning the Colorado Securities Commissioner’s request for a preliminary injunction.
During the hearing, state officials are expected to elaborate on how the Regalados violated state securities laws. It remains uncertain whether prosecutors can successfully argue that the couple did not receive divine guidance regarding utility coins. The case involving the Regalados sheds light on the intersection of faith and financial dealings, raising questions about the responsibilities of individuals who leverage religious beliefs in financial matters. The outcome of the legal proceedings will determine the extent to which the Regalados will be held accountable for their actions, and whether the defense based on divine guidance will withstand legal scrutiny.