Speaking to online followers Aug. 22, 2022, Rev. Eli Regalado had a divine message.
“It was last October that the Lord brought this cryptocurrency to me. He said, ‘Take this to my people for a wealth transfer.’ It has been confirmed a hundred times since,” the pastor said, according to a lawsuit filed in Denver this week.
“It is coming, people,” he said. “Part of the making way for His people is to really train them up and teach them how finances work in the kingdom because many of you very soon are going to have more money than you’ve ever had in your life by participating in this crypto.”
Regalado, a Denverite who, alongside his wife Kaitlyn, runs the online-only Victorious Grace Church, is also the creator of the cryptocurrency INDXcoin and the Kingdom Wealth Exchange, the only online marketplace where INDXcoin could be bought and sold. Both INDXcoin and the exchange were shut down on Nov. 1, leaving investors scrambling for answers.
That same day, Regalado said that God had asked him to pass on a message to investors.
“Stay where you’re at. Stay in INDXcoins. Stay with where I’m telling you to go. I’m going to make a way,” the Lord said to crypto investors, according to Regalado. “Just take that word as gospel truth and execute on that word and do not worry about how the money’s going to happen. I really believe you’re going to see a miracle in very short order.”
State regulators say that no miracle has been forthcoming. So, they’re suing Eli and Kaitlyn Regalado for securities fraud.
Tung Chan, the state’s securities commissioner, wrote in Tuesday’s lawsuit that the Regalados sold $3.4 million in “valueless” INDXcoins in 2022 and the first half of 2023. Chan, whose office subpoenaed the couple’s bank records, claims that at least $1.3 million of that went directly to the Regalados, who spent it on a Range Rover, jewelry, luxury handbags, cosmetic dentistry, boat rentals and snowmobile adventures, home renovations and an au pair.
“Defendants have ensured that the investors will never recoup their funds because they took the investment money for their own benefit,” according to this week’s lawsuit.
They also sent another $290,000 to their church, which does not have a brick-and-mortar location. The church is a nonprofit that the Regalados own.
“Defendants told investors that they would ‘tithe’ and ‘sow’ in causes that helped widows and orphans…but the payments to ‘widows and orphans’ were primarily to the Regalados,” according to Chan’s lawsuit, which was filed in Denver District Court.
Phone calls to the Regalados’ listed phone numbers were not answered Wednesday and an email to Kingdom Wealth Exchange bounced back. A website for Victorious Grace Church has been taken down. A message to the church on Facebook was not answered.
A local accountant, Mark Mergo, who is named as INDXcoin’s chief financial officer in Chan’s lawsuit, did not return BusinessDen’s phone call and email Wednesday.
The Colorado Division of Securities sais Eli and Kaitlyn Regalado ran a now-defunct marketing company, Grace Led Marketing, before creating their cryptocurrency in 2021. They marketed INDXcoin as unusually stable, because it would be linked to the most valuable cryptocurrencies in the world. That wasn’t true, according to Chan’s lawsuit.
Before the cryptocurrency was shut down, INDXcoins sold for $1.50 each, payable to Eli Regalado’s Venmo account or by wire transfer to Grace Led Marketing’s bank account. Investors were told that every INDXcoin was worth at least $10, according to the lawsuit, and that there were 30 million such coins in circulation, meaning the company should have had $300 million backing the coins. State investigators instead found $30,000.
And while “Eli and Kaitlyn were skilled, experienced marketers who had raised millions of dollars for others, they were not experienced coders,” Chan alleges. The result was a cryptocurrency and exchange that were both “catastrophically technologically deficient.”
Hacken, a cybersecurity company, audited the cryptocurrency, according to INDXcoin’s website. State investigators, who obtained copies of Hacken’s audits, say that the Regalados fail to mention that Hacken gave it a rating of “zero out of 10.”
As a result of its liquidity shortcomings, the Regalados had to close the Kingdom Wealth Exchange periodically to avoid the equivalent of a run on a bank. When the exchange closed for good in November, Eli Regalado claimed that the couple was “literally at the doorstep of poverty right now. We’re pushing out payments on our mortgage, vehicle, etcetera.”
In addition to securities fraud, Chan accuses the couple and their companies of selling investments without a license and selling unregistered securities. Her allegations are civil, not criminal, meaning they are punishable by fines rather than prison time.
On Wednesday, Judge David Goldberg ordered the bank accounts of the Regalados, INDXcoin, the Kingdom Wealth Exchange and Grace Led Marketing frozen for 14 days, at Chan’s request. He also ordered the Regalados to temporarily stop selling securities in Colorado.
Because INDXcoins can be traded only on an exchange that no longer exists, investors have no way to recoup their losses. Chan hopes to recover some of their money in court.
What’s next for the Regalados remains to be seen. But during a video update to investors in 2022, Eli Regalado passed along an uplifting reminder about INDXcoin from above.
“God reminds Eli and Kaitlyn,” he said then, “that it is impossible to mess this up.”