A Denver pastor pocketed $1.3 million by selling worthless crypto to his flock on a platform he created with his wife, a lawsuit alleges.
Eli Regalado, who runs Victorious Grace Church, created the Kingdom of Wealth exchange in 2022 with his wife Kaitlyn.
Investors were told that their INDXcoins, a form of crypto that could only be traded on the couple’s platform, were “God-backed.” They bought each coin for $1.50 and were told they were worth at least $10, investigators say.
But on November 1, the stock market closed, leaving investors with no way to get their money back.
Now Regalado and his wife Kaitlyn are facing charges of securities fraud DenverPost reports and the SEC has frozen their assets.
Denver pastor Eli Regalado and his wife Kaitlyn created ‘God-backed’ crypto exchange Kingdom of Wealth and are selling INDXcoins to their flock, which researchers say are ‘worthless’
Investigators say the couple sold $3.4 million worth of ‘worthless’ INDX coins and pocketed at least $1.3 million, which they splashed out on a Range Rover, luxury handbags, home renovations, cosmetic dentistry and a au pair.
They also sent $290,000 to their church, a nonprofit organization owned by the couple, the lawsuit alleges.
Investors were wrongly told that INDXcoins were dramatically more stable than other cryptocurrencies, state researchers said. They labeled the plan as ‘catastrophically technologically inadequate’.
“INDXcoin offers holders an unparalleled risk-reward ratio, making it a coveted cryptocurrency for both new and experienced crypto enthusiasts,” Regalado told Digital Journal.
Regalado, who previously served prison time for violent car jackings, claims God gave him the idea to bring cryptocurrency to his church.
“The Lord is telling me that I need you to bring cryptocurrency to my people,” Regalado said in an interview titled “Following God’s Voice in Crypto.”
In the same interview, he revealed that he was imprisoned at the age of 20 for “boosting cars” before being released and finding God.
Before the stock market closed, investors were told that there were 30 million INDXcoins in circulation, meaning the company should have made $300 million from the coins. State investigators found only $30,000 in the bank.
The SEC froze their assets for two weeks and banned them from selling securities in Colorado
Researchers said that investors in INDXcoins will not be able to recoup their money. The coins were sold for $1.50 each and buyers were told they were worth $10, but prosecutors say that wasn’t true
“Defendants have ensured that the investors will never get their money back because they used the investment money for their own benefit,” Colorado state securities commissioner Tung Chan said in the lawsuit.
“Defendants told investors they would ‘tithe’ and ‘sow’ to charities that helped widows and orphans… but the payments to ‘widows and orphans’ went primarily to the Regalados.”
Prior to their crypto foray, the couple operated a marketing company called Grace Led Marketing.
“Eli and Kaitlyn were skilled, experienced marketers who had raised millions of dollars for others, but not experienced coders,” Chan claims.
Fearing a crash similar to a bank run, the couple closed the operation permanently last year. Regalado had previously stated that “God reminds him” that it is “impossible to screw this up” as he had divine support.
The now-defunct Kingdom of Wealth exchange website boasted that its platform had been controlled by cybersecurity firm Hacken.
However, the company did not disclose that Hacken had rated their company a zero out of 10, Chan said.
Judge David Goldberg on Wednesday ordered the Regalados’ accounts frozen for 14 days and banned them from selling securities in Colorado.
They face civil charges rather than criminal charges, meaning that if they are found liable, they will be fined rather than jailed.
In a statement, Regalado addressed the lawsuit, saying the “allegations are true” and that the company “ran out of money” while it was “spreading money.”
But he claimed he was merely doing the Lord’s will and said he hoped “God will do a miracle in the financial industry.”
“We always had the impression that God would provide, that the well would never end, that God was doing something new and that we had nothing to worry about and that we have the track record to prove it,” Regalado said .
“When the exchange hit and things started to fall apart, I’ll be honest, Kaitlyn and I started turning on each other. We were upside down at least 4 times in the beginning.
“I said, Lord, I don’t know how to do this, I don’t have any experience in this business, I don’t want to get caught up in anything and this is where we are now. Either I have misunderstood God (…) or God is still not done with this project.’
He also called on his followers not to get “angry” at the SEC lawyers.
“We sold a cryptocurrency with no clear exit,” Regalado said. “That’s what we did, we took God at his word and sold a cryptocurrency with no clear exit. So prosecutors have to take that into account.
“We go to court and plead our case and say this is why we did it and these are all the journal entries leading up to it, but we say yes, we did this.”
