A Colorado pastor and his wife were embroiled in controversy this week after they were accused of embezzling millions of dollars through cryptocurrency tokens they sold to devout Christians and claimed were created with God’s instructions.
Denver-area pastor Eligio “Eli” Regalado and his wife Kaitlyn reportedly raised about $3.2 million through the sale of INDXcoin, a cryptocurrency token issued through their online church, Victorious Grace.
Earlier this week, the Colorado Securities Commissioner sued the couple, claiming they defrauded investors and illegally sold securities without proper registration. On Thursday, a Colorado judge froze Victorious Grace Church’s assets based on these claims.
According to legal documents filed by the state, Regalados argued that INDXcoin is pegged to a cryptocurrency index and backed by sufficient assets to secure that peg. In fact, the Colorado Securities Commission claims that this coin was backed by almost nothing except the Word of God.
“Defendant Eli took advantage of the trust of potential investors,” the complaint said. “He said the success of their investment was guaranteed by God.”
Regalados has argued from the beginning that INDXcoin is a utility coin, not a securities offering, and is therefore exempt from securities regulation. According to legal filings, the couple attempted to invoke a higher authority than INDXcoin when several experts rejected that claim and told Regalados that INDXcoin was actually a security service. Howey test.
“(We) wasted a lot of time trying to collaborate with world experts,” Eli Regalado posted on a community forum for INDXcoin holders last May, according to the filing. “(They say) what Ellie and Caitlin are doing is securities, and God says, ‘No, it’s a utility coin.’”
INDXcoin could only be exchanged for USD through the Kingdom Wealth Exchange, a platform controlled by Regalados and regularly shut down by Colorado regulators to avoid bank operations. When some investors began to grow wary of INDXcoin’s lack of returns and began considering a full cashout, Eli Regalado told them that God spoke to them. Him The thing is, everyone has to HODL.
“The defendant also told investors that God told them to stay where they are. Stay with INDXcoins. Stay where I direct you. I will make a way,” the complaint reads.
Regalados eventually shut down the Kingdom Asset Exchange last year after claiming there were not enough active “stakers” to keep it running. The couple then relayed to INDXcoin holders that God had told everyone to stop asking questions and continue investing in the coin.
Regalados reportedly pocketed $1.3 million in the process of raising more than $3 million, which he spent on luxury handbags, cosmetic dentistry, snowmobile adventures and more. au pairHome improvement, luxury vacations and other items.
decryption We reached out to Regalados but did not immediately receive a response. in video Posted on INDXcoin community site On Friday evening, Eli Regalado addressed the situation publicly for the first time.
“There are allegations that Kaitlyn and I pocketed $1.3 million, and I just wanted to say that those allegations are true,” Regalado said. “But of that $1.3 million, $500,000 went to the IRS, and hundreds of thousands of dollars went toward home improvements that the Lord directed us to make.”
Regalado also revealed that when God approached him about creating INDXcoin, Regalado initially had concerns about the liquidity of the token. According to the pastor, God responded, “Trust me.”
The couple is scheduled to receive a hearing on the Colorado Securities Commissioner’s request for a preliminary injunction on the 29th of next month.
At the hearing, state officials will expand their claims about how Regalados violated state securities laws. Will the prosecution be able to prove what God did? ~ no Talking to Regalados about utility coins is another matter.
Editor: Andrew Hayward