A Colorado pastor is accused of taking advantage of followers of his virtual church with a $1.3 million cryptocurrency fraud scheme, which he claimed in a video statement the Lord made him do.
Eli Regalado and his wife Kaitlyn created and marketed their cryptocurrency, known as INDXcoin, to members of the Christian community around the Denver area. According to a statement from the Colorado Division of Securities, Regalado claimed to people that “God told him directly that investors would become wealthy if they put money into INDXcoin.”
The alleged scheme raised nearly $3.2 million from over 300 individuals in less than a year. The Securities Division said $1.3 million of those funds went directly to the Regalados “to support their lavish lifestyle” and, in reality, INDXcoin was “practically worthless.”
In a video statement posted to the INDXcoin website, Regalado said the charges “are true” and “a few hundred thousand dollars went to a home remodel that the Lord told us to do.”
The Regalados had no experience in cryptocurrency, which Eli said himself, and when a third-party auditor’s report allegedly described their INDXcoin code as unsafe and riddled with technical problems, the Securities Division said, the couple allegedly continued to promote the INDXcoin as a low risk, high-profit investment.
“We allege that Mr. Regalado took advantage of the trust and faith of his own Christian community and that he peddled outlandish promises of wealth to them when he sold them essentially worthless cryptocurrencies,” said Colorado Securities Commissioner Tung Chan, who filed the civil fraud charges. “New coins and new exchanges are easy to create with open source code. We want to remind consumers to be very skeptical.”
In his video statement, Regalado said, “One of two things have happened. Either one, either I misheard God and every one of you who came and prayed in, you as well; or two, God is still not done with this project and he is going to do a new thing.”
He added that he doesn’t want anyone “getting mad” with the prosecutors in the case against him and his wife and that they have to do this. “We took God at this word and we sold a cryptocurrency with no clear exit,” Regalado admitted.
The action, filed in Denver District Court, is seeking preliminary and injunctive relief, damages for investors and a constructive trust to be placed on the Regalado’s property.
The Securities Division is urging others who have invested in INDXCoin to contact them.
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