The Rev. Eli Regalado of Denver speaks in a Victorious Grace Church video. (Facebook)
An unusually messy civil trial — with biblical passages and modern prophecies, artificial intelligence and blockchain technologies, and more disruptions than any observer could count — played out across three odd days in a downtown Denver courtroom last week.
It left Judge Heidi Kutcher with four legal pads full of notes and a $3.4 million decision to make this summer: Were purchasers of an online pastor’s cryptocurrency victims of fraud or satisfied customers who willingly bought their way into a community of like-minded believers?
“There was not the expectation of receiving anything from INDXcoin,” Josiah Swank, a social media strategist in Colorado Springs, testified at the trial. “If something came from it, great. But ultimately, for sowing into that, God has blessed me and my family in other ways.”
INDXcoin was founded in 2021 by Denver pastor Eli Regalado and his wife, Kaitlyn, experienced marketers who say God told them to create it. They sold $3.4 million in coins and spent $1.3 million of that on personal expenses before the Kingdom Wealth Exchange, the online marketplace where INDXcoin was bought and sold, shut down in November 2023.
The Colorado Division of Securities considers the couple to be fraudsters who duped investors into buying a coin that was backed by nothing, spent investor cash on a luxurious lifestyle and knew that purchasers of INDXcoin would be left holding a worthless cryptocurrency.
“Why did you believe that you were going to sell your INDXcoin for a profit?” Eli Regalado asked Kevin Terrien, a commercial real estate consultant and friend of Regalado’s father.
“Because you told me there was a 10x opportunity here,” testified Terrien, who lost $200,000.
Eli and Kaitlyn Regalado pose with their certificates of ordination in a photo shared by Victorious Grace Church. (Facebook)
Terrien was the only aggrieved INDXcoin investor to testify for the government last week. He was also the only investor to testify that he bought INDXcoin entirely for profit.
“The spirituality didn’t resonate with me,” he said. “I thought it was bullshit, to be honest.”
Much of last week’s trial focused on the central promise of INDXcoin: That its value would be indexed. Take the price of the 100 most valuable cryptocurrencies, add them up, divide by 100 and you would have the price of an INDXcoin. When Terrien bought 200,000 coins for $1 each, that indexed value was about $9, meaning he stood to make $1.6 million overnight.
“My crypto wallet had the calculated algorithmic value of INDXcoin on there, what it could be,” he testified. “But there was no exchange, so it was a fantasy. It was stardust, man.”
The Regalados and their followers argue that the value of INDXcoin was and is immutable, safeguarding it from the wild fluctuations and pump-and-dump schemes commonly associated with crypto. Throughout the trial, they compared it to the S&P 500 and index funds.
“You put your money in and, depending on how the (crypto) market does, that’s your return,” Mason Pastorello, a salesman in Oklahoma who spent $1,050 on INDXcoin, testified.
“There were no guarantees from any physical people, but I felt very confident in my heart to invest,” Pastorello said. “When I read my Bible, God is faithful, so he is guaranteed.”
But INDXcoin did not have anywhere near enough liquidity to rebuy at $9 the coins it had sold for $1 or $1.50. So, when the Kingdom Wealth Exchange opened, one unidentified trader in Canada made a flurry of sales, drained the liquidity, and forced a closure of the exchange.
“One homie just freakin’ smoked it,” testified Nathanael Enos, a friend of the Regalados.
The Colorado Attorney General’s Office, which has prosecuted the civil case on behalf of the Division of Securities, says the failure of INDXcoin was foreseeable and a direct result of the Regalados’ actions. They agree with Terrien that its indexed value was a fantasy.
“Wouldn’t you say that the value of INDXcoin is what a willing buyer and a willing seller would agree to in a transaction?” Assistant Attorney General Janna Fischer asked.
“I would say that’s probably why the economy is in the state that it is in,” Eli Regalado answered during the second day of the three-day trial. “And the answer is no.”
To the Regalados, Enos and the three INDXcoin buyers who testified in their defense, the coin was an idea handed down by God and a project that God is still not finished with.
“It gave me hope for the financial future, not only of America but of the world. There is a lot of money in the hands of people who may not do great things with it,” Pastorello said without further elaboration. “So, it gave me hope that we could do something good.”
Eli Regalado speaks to INDXcoin buyers in a since-deleted video on Jan. 19, 2024. (YouTube)
Christianity was a constant presence during the short trial. The Regalados testified that all INDXcoin business decisions were made by prayer from them and other prophets, known as the company’s “prophetic circle.” The judge let the Regalados testify about what God had supposedly told them — “You’re getting away with all the Lord hearsay,” as she put it — but not what God told others. At times, she interrupted testimony that crossed lines.
“I’m not going to allow sermons or preaching in my courtroom, because I have to keep that separate,” she told Eli Regalado at one point, as he discussed sowing and tithing.
The Regalados and Enos, who was also a defendant because he profited from the sale of INDXcoin to three roommates, including Swank and Pastorello, represented themselves during the trial. At times, Kutcher had to coach them on making motions and objections.
And on the last day of trial, when she came to believe the Regalados were receiving advice from an attorney watching the trial online, she removed observers from the WebEx livestream and threatened to hold people in contempt of court. She also warned the Regalados to ensure any case law they were citing was accurate, after finding “hallucinated” case citations in a motion before the trial, presumably introduced by artificial intelligence software.
As they made their closing arguments to Kutcher last Wednesday, the Regalados claimed the overwhelming majority of the 596 buyers of INDXcoin still have faith that the project will be a success. They say the state could only find one, Terrien, who believes otherwise.
“We didn’t defraud people, we didn’t scam people, we’re not predators, we’re not full of greed,” Kaitlyn Regalado said in brief remarks. “Many people got saved by this project.”
Assistant Attorney General Sarah Donahue, meanwhile, asked Kutcher to bar the Regalados from selling INDXcoin and to make them repay $3.4 million to INDXcoin buyers.
“It is not my place to say whether God is or is not done with the INDXcoin scheme,” Donahue said Wednesday, “but it is the court’s place to say the INDXcoin scheme is a scam.”
“And it is absolutely the court’s place to tell the Regalados they are done with INDXcoin.”
The Rev. Eli Regalado of Denver speaks in a Victorious Grace Church video. (Facebook)
An unusually messy civil trial — with biblical passages and modern prophecies, artificial intelligence and blockchain technologies, and more disruptions than any observer could count — played out across three odd days in a downtown Denver courtroom last week.
It left Judge Heidi Kutcher with four legal pads full of notes and a $3.4 million decision to make this summer: Were purchasers of an online pastor’s cryptocurrency victims of fraud or satisfied customers who willingly bought their way into a community of like-minded believers?
“There was not the expectation of receiving anything from INDXcoin,” Josiah Swank, a social media strategist in Colorado Springs, testified at the trial. “If something came from it, great. But ultimately, for sowing into that, God has blessed me and my family in other ways.”
INDXcoin was founded in 2021 by Denver pastor Eli Regalado and his wife, Kaitlyn, experienced marketers who say God told them to create it. They sold $3.4 million in coins and spent $1.3 million of that on personal expenses before the Kingdom Wealth Exchange, the online marketplace where INDXcoin was bought and sold, shut down in November 2023.
The Colorado Division of Securities considers the couple to be fraudsters who duped investors into buying a coin that was backed by nothing, spent investor cash on a luxurious lifestyle and knew that purchasers of INDXcoin would be left holding a worthless cryptocurrency.
“Why did you believe that you were going to sell your INDXcoin for a profit?” Eli Regalado asked Kevin Terrien, a commercial real estate consultant and friend of Regalado’s father.
“Because you told me there was a 10x opportunity here,” testified Terrien, who lost $200,000.
Eli and Kaitlyn Regalado pose with their certificates of ordination in a photo shared by Victorious Grace Church. (Facebook)
Terrien was the only aggrieved INDXcoin investor to testify for the government last week. He was also the only investor to testify that he bought INDXcoin entirely for profit.
“The spirituality didn’t resonate with me,” he said. “I thought it was bullshit, to be honest.”
Much of last week’s trial focused on the central promise of INDXcoin: That its value would be indexed. Take the price of the 100 most valuable cryptocurrencies, add them up, divide by 100 and you would have the price of an INDXcoin. When Terrien bought 200,000 coins for $1 each, that indexed value was about $9, meaning he stood to make $1.6 million overnight.
“My crypto wallet had the calculated algorithmic value of INDXcoin on there, what it could be,” he testified. “But there was no exchange, so it was a fantasy. It was stardust, man.”
The Regalados and their followers argue that the value of INDXcoin was and is immutable, safeguarding it from the wild fluctuations and pump-and-dump schemes commonly associated with crypto. Throughout the trial, they compared it to the S&P 500 and index funds.
“You put your money in and, depending on how the (crypto) market does, that’s your return,” Mason Pastorello, a salesman in Oklahoma who spent $1,050 on INDXcoin, testified.
“There were no guarantees from any physical people, but I felt very confident in my heart to invest,” Pastorello said. “When I read my Bible, God is faithful, so he is guaranteed.”
But INDXcoin did not have anywhere near enough liquidity to rebuy at $9 the coins it had sold for $1 or $1.50. So, when the Kingdom Wealth Exchange opened, one unidentified trader in Canada made a flurry of sales, drained the liquidity, and forced a closure of the exchange.
“One homie just freakin’ smoked it,” testified Nathanael Enos, a friend of the Regalados.
The Colorado Attorney General’s Office, which has prosecuted the civil case on behalf of the Division of Securities, says the failure of INDXcoin was foreseeable and a direct result of the Regalados’ actions. They agree with Terrien that its indexed value was a fantasy.
“Wouldn’t you say that the value of INDXcoin is what a willing buyer and a willing seller would agree to in a transaction?” Assistant Attorney General Janna Fischer asked.
“I would say that’s probably why the economy is in the state that it is in,” Eli Regalado answered during the second day of the three-day trial. “And the answer is no.”
To the Regalados, Enos and the three INDXcoin buyers who testified in their defense, the coin was an idea handed down by God and a project that God is still not finished with.
“It gave me hope for the financial future, not only of America but of the world. There is a lot of money in the hands of people who may not do great things with it,” Pastorello said without further elaboration. “So, it gave me hope that we could do something good.”
Eli Regalado speaks to INDXcoin buyers in a since-deleted video on Jan. 19, 2024. (YouTube)
Christianity was a constant presence during the short trial. The Regalados testified that all INDXcoin business decisions were made by prayer from them and other prophets, known as the company’s “prophetic circle.” The judge let the Regalados testify about what God had supposedly told them — “You’re getting away with all the Lord hearsay,” as she put it — but not what God told others. At times, she interrupted testimony that crossed lines.
“I’m not going to allow sermons or preaching in my courtroom, because I have to keep that separate,” she told Eli Regalado at one point, as he discussed sowing and tithing.
The Regalados and Enos, who was also a defendant because he profited from the sale of INDXcoin to three roommates, including Swank and Pastorello, represented themselves during the trial. At times, Kutcher had to coach them on making motions and objections.
And on the last day of trial, when she came to believe the Regalados were receiving advice from an attorney watching the trial online, she removed observers from the WebEx livestream and threatened to hold people in contempt of court. She also warned the Regalados to ensure any case law they were citing was accurate, after finding “hallucinated” case citations in a motion before the trial, presumably introduced by artificial intelligence software.
As they made their closing arguments to Kutcher last Wednesday, the Regalados claimed the overwhelming majority of the 596 buyers of INDXcoin still have faith that the project will be a success. They say the state could only find one, Terrien, who believes otherwise.
“We didn’t defraud people, we didn’t scam people, we’re not predators, we’re not full of greed,” Kaitlyn Regalado said in brief remarks. “Many people got saved by this project.”
Assistant Attorney General Sarah Donahue, meanwhile, asked Kutcher to bar the Regalados from selling INDXcoin and to make them repay $3.4 million to INDXcoin buyers.
“It is not my place to say whether God is or is not done with the INDXcoin scheme,” Donahue said Wednesday, “but it is the court’s place to say the INDXcoin scheme is a scam.”
“And it is absolutely the court’s place to tell the Regalados they are done with INDXcoin.”
