A Colorado pastor and his spouse are in sizzling water this week after allegedly making away with hundreds of thousands of {dollars} raised via a crypto token they marketed to religious Christians—and claimed was made due to God’s instruction.
The Denver-area couple, pastor Eligio “Eli” Regalado and his spouse Kaitlyn, reportedly raised some $3.2 million via gross sales of INDXcoin, a crypto token that they issued via a web based church, Victorious Grace.
Earlier this week, Colorado’s Securities Commissioner sued the couple, claiming they fraudulently deceived traders and illegally offered securities with out correct registration. On Thursday, a Colorado choose froze the belongings of Victorious Grace Church based mostly on these allegations.
In line with authorized filings made by the state, the Regalados claimed that INDXcoin was pegged to an index of cryptocurrencies, and backed by sufficient belongings to safe that peg. In actuality, the Colorado Securities Fee alleges, the coin was backed by virtually nothing—save God’s phrase.
“Defendant Eli leveraged the potential traders’ religion,” the grievance stated. “He acknowledged that their investments’ success was assured by God.”
From the beginning, the Regalados insisted that INDXcoin was not a safety providing, however as a substitute a utility coin, and subsequently exempt from securities rules. In line with authorized filings, when a number of consultants rebuffed that declare and informed the Regalados that INDXcoin was actually a safety providing, the couple tried to invoke an influence larger than that of the Howey Take a look at.
“[We] wasted a variety of time making an attempt to work with the world’s consultants,” Eli Regalado posted on a neighborhood discussion board for INDXcoin holders final Could, based on the submitting. “[They said] what Eli and Kaitlyn are doing is a safety, however God says, ‘No, it’s a utility coin.’”
INDXcoin was solely capable of be exchanged for USD via Kingdom Wealth Trade, a platform that the Regalados additionally managed and, Colorado regulators say, routinely shut all the way down to keep away from a financial institution run. When some traders started rising cautious of INDXcoin’s lack of returns and thought of totally cashing out, Eli Regalado reportedly informed them that God was telling him that everybody ought to HODL.
“Defendant additional informed traders that God was telling him to inform traders to “[s]tay the place you’re at. Keep in INDXcoins. Stick with the place I’m telling you to go. I’m going to make a method,” the grievance reads.
The Regalados ultimately shut down the Kingdom Wealth Trade final yr, after claiming there weren’t sufficient lively “stakers” to maintain it working. The couple then relayed to INDXcoin holders that God had informed them that everybody ought to keep invested within the coin, and never ask questions.
In the midst of elevating over $3 million, the Regalados allegedly pocketed $1.3 million, which they spent on luxurious purses, beauty dentistry, snowmobile adventures, an au pair, house renovations, luxurious holidays, and different gadgets.
Decrypt reached out to the Regalados however didn’t instantly obtain a response. In a video posted to the INDXcoin neighborhood website Friday night, Eli Regalado addressed the scenario publicly for the primary time.
“The fees are that Kaitlyn and I pocketed $1.3 million, and I simply needed to return out and say that these prices are true,” Regalado stated. “However out of that $1.3 [million], half one million {dollars} went to the IRS, and some hundred thousand {dollars} went to a house transform that the Lord informed us to do.”
Regalado additionally clarified that when God approached him about creating INDXcoin, Regalado initially had issues in regards to the token’s liquidity—to which God replied, based on the pastor, “Belief me.”
The couple will subsequent face a listening to on January 29 relating to the Colorado Securities Commissioner’s request for a preliminary injunction.
On the listening to, state officers will possible increase on arguments as to how the Regalados violated state securities legal guidelines. Whether or not prosecutors will be capable of show that God did not communicate to the Regalados about utility cash is one other matter.
Edited by Andrew Hayward
