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An online pastor has been charged with civil fraud for selling a cryptocurrency that regulators described as “virtually worthless.” His explanation: God told him to do it – although it's possible he “misunderstood.”
Colorado's securities commissioner filed a lawsuit last week against Eligio Regalado, who goes by Eli, and his wife, Kaitlyn Regalado. The couple raised nearly $3.2 million by targeting Denver's Christian community with the cryptocurrency, marketed as INDXcoin, the complaint says.
Investigators accused the couple of violating Colorado's anti-fraud, licensing and registration laws. They claimed the cryptocurrency is being promoted as a “low-risk, high-reward investment” when in reality it is “illiquid and virtually useless.” Cryptocurrencies can typically be converted into cash or other currencies through a digital platform or trading exchange.
“The Lord said, I want you to build this,” Regalado said. “We took God at his word and sold a cryptocurrency with no clear way out.”
“We allege that Mr. Regalado exploited the trust and faith of his own Christian community and that he made outlandish promises of wealth to them while selling them virtually worthless cryptocurrencies,” Colorado Securities Commissioner Tung Chan said in a statement.
The filing alleged that although investors lost millions of dollars, the Regalados used the funds to support their “lavish lifestyle.” The couple sold the digital asset to more than 300 investors between June 2022 and April 2023, the statement added.
In the video message, Regalado confirmed that he and his wife made $1.3 million selling the cryptocurrency, of which they spent “a few hundred thousand dollars” on “a home renovation that the Lord told us to do.”
“Either I misunderstood God, and every one of you who prayed and came in – you too.” Or two, God is still not done with this project,” Regalado said.
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Although Regalado had no experience trading cryptocurrencies, he said he was inspired to sell INDXcoin because “God is in doing new things and breaking seals.” And he told us to do that. “
“I said, Lord, I don’t want to do this. I don't know how to do this. I have no experience in this industry. I do not know what I'm doing. I don’t want to get caught up in anything.”
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According to Regalado, investors who purchased INDXcoin were subsequently unable to convert the cryptocurrency into cash due to technical flaws. “We started an exchange. The replacement technology has failed. “It went downhill,” the priest said. “I know, this looks terrible.”
In a November post announcing that the cryptocurrency network and exchange would remain offline “for now,” Regalado said the outage had affected his mental health. He recommended that investors “stop letting mammon (money chasing) rule you” and “remove all negative conversations from the community,” which he said was flooded with negative comments.
The Colorado Securities Commissioner's statement said the Regalados had “no experience with cryptocurrencies,” which became clear when “an external auditor's report allegedly described their INDXcoin code as insecure, insecure, and riddled with serious technical issues.”
“New coins and new exchanges can be easily created with open source code. We would like to remind consumers to be very skeptical,” Chan said.