The Rev. Eli Regalado speaks to INDXcoin buyers in a since-deleted video on Jan. 19, 2024. (YouTube)
The state of Colorado on Monday put a supposedly God-inspired cryptocurrency and the Denver pastor who founded it on trial as it seeks to claw back $3.4 million.
“From the outset, the market for INDXcoin was inherently deceptive,” Assistant Attorney General Sarah Donahue said, “and the value of the coin was inherently deceptive.”
This week’s civil trial pits the Colorado Division of Securities against Eli and Kaitlyn Regalado, the couple who founded INDXcoin in 2021, claiming to do so at God’s urging, and then sold $3.4 million of the crypto to investors around the U.S. in 2022 and the first half of 2023.
INDXcoin could only be bought and sold on the Kingdom Wealth Exchange, an online marketplace the Regalados started and then quickly shut down in November 2023. That left purchasers holding coins that could not be bought or sold, rendering them useless.
“Our whole focus in this trial is to show how terrible and inconsistent and absolutely amateur this (Division of Securities) investigation was,” Eli Regalado said in his opening statement.
The Regalados are representing themselves in the trial. Joining them at the defense table is their friend Nathanael Enos of Colorado Springs, who is accused of selling INDXcoin.
“I’m pretty much here because I told my roommates about this,” he said. “I prayed with them for lots and lots and lots of hours, and I told my roommates about INDXcoin. That’s all.”
Much of what happened to INDXcoin is not in dispute. Eli Regalado, who ran the online-only Victorious Grace Church, told his followers that INDXcoin would bring them “more money than you’ve ever had in your life.” The Regalados then spent $1.3 million of proceeds from the sale of coins on a Range Rover, jewelry, luxury handbags, cosmetic dentistry, boat rentals and snowmobile adventures, home renovations and an au pair, among other expenses.
Kaitlyn and Eli Regalado (Facebook)
State regulators say that INDXcoin was a fraud from the start. Investors were promised big returns by a couple who ran off with their hard-earned money, as the state sees it.
“Mr. Regalado is a pastor and the Regalados are seasoned marketers,” Donahue said Monday. “They knew just the language to use to market their coin to people of faith.
“Investors should get their money back,” she told District Judge Heidi Kutcher.
The Regalados say that profits from the sale of INDXcoin were theirs to spend as they wish, that no buyers were lied to, and that any setbacks INDXcoin has suffered are temporary. They still expect that, with God’s help, the cryptocurrency will come to be valuable one day.
“There was no harm to the public. Were there things that didn’t go our way? Absolutely,” Eli Regalado, who spoke on behalf of himself and his wife, said in an opening statement.
“This wasn’t fraud, it wasn’t deception, it was (computer) code and a sincere attempt to operate in a legal environment. The facts are going to show there was lawful intent,” Regalado said.
The morning’s testimony was dominated by employees of the Colorado Division of Securities, Chritina Mallard and Ioana Dobra, who led the probe into INDXcoin. They walked the court through the tactics and findings of their investigation, which included videos of Eli Regalado telling his online parishioners to continue believing that God would right the ship.
“So, the charges are that Kaitlyn and I pocketed $1.3 million, and I just want to come out and say that those charges are true,” he said in one video. “There has been $1.3 million that has been taken out of a total of $3.4 million. Out of that, half of a million dollars went to the IRS and a few hundred thousand dollars went to a home remodel that the Lord told us to do.”
In the middle of the afternoon, Eli Regalado took the stand. He explained how INDXcoin sought legal advice that convinced him INDXcoin was not a security and therefore he could not commit securities fraud, and how technical problems led to the closure of the Kingdom Wealth Exchange in 2023.
The Rev. Eli Regalado, of Denver, speaks in a Victorious Grace Church video. (Facebook)
“You told INDXcoin purchasers that they could expect a return on their investment?” Assistant Attorney General Janna Fischer asked him at one point.
“I said that you would have more money than you have ever had in your life with this cryptocurrency and others, was the exact statement,” Regalado answered.
The first day of trial featured some awkward moments as Enos and the Regalados came to understand what they can and cannot do under the court’s rules. It also included uses of cryptocurrency and algorithmic lingo that was not familiar to all in attendance.
“Wait, a theorem?” the court reporter asked Eli Regalado at one point.
“Ethereum,” he said. “E-t-h-e-r-e-u-m. You’re going to hear all sorts of new words today.”
Kutcher will decide the case of the Regalados. The state is seeking $3.4 million from the couple, their companies and their friend Enos. The defendants ask that the case be dismissed.
The Regalados in general and Eli Regalado in particular looked confident during day one. Dressed in a black suit with a white shirt unbuttoned at the top, he smiled and joked often.
“We ask that the facts guide a remedy,” the online pastor told the judge Monday. “What we are looking for is justice. We are not looking for pity.” He then ended with, “Amen.”
