A Denver pastor pocketed $1.3 million selling worthless crypto to his flock on a platform he set up with his wife, a lawsuit claims.
Eli Regalado who runs the online-only Victorious Grace Church set up the Kingdom of Wealth exchange in 2022 along with his spouse Kaitlyn.
Investors were told 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 exchange was shutdown leaving investors with no possible way to recoup the funds.
Now Regalado and his wife Kaitlyn are being sued for securities fraud, the Denver Post reports and the SEC has frozen their assets.
Denver pastor Eli Regalado and his wife Kaitlyn set up ‘God-backed’ crypto exchange Kingdom of Wealth selling INDXcoins to their flock which investigators say are ‘valueless’
Investigators say the couple sold $3.4 million in ‘valueless’ INDXcoins and pocketed at least $1.3 million, which they splashed on a Range Rover, luxury handbags, home renovations, cosmetic dentistry and an au pair among other extravagances.
They also sent $290,000 to their church, a non-profit owned by the couple, the lawsuit claims.
Investors were falsely told INDXcoins were dramatically more stable than other crypto, according to state investigators. They branded the scheme ‘catastrophically technologically deficient’.
‘INDXcoin provides holders with an unparalleled risk-to-return ratio, making it a coveted cryptocurrency to both new and experienced crypto enthusiasts,’ Regalado told Digital Journal.
Regalado, who previously served time for violent car jackings, claims God presented him with the idea of taking cryptocurrency to his church.
‘The Lord tells me I need you to take cryptocurrency to my people,’ Regalado said in an interview entitled, ‘Following God’s voice in to Crypto.’
In the same interview, he disclosed that he had been jailed aged 20 for ‘boosting cars’ before being freed and finding God.
Before the exchange was shutdown, 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 just $30,000 in the bank.
The SEC has frozen their assets for two weeks and banned them from selling securities in Colorado
Investigators said investors in INDXcoins will be unable to recoup their money. The coins were sold for $1.50 each and buyers were told they were worth $10, however prosecutors say this was not true
‘Defendants have ensured that the investors will never recoup their funds because they took the investment money for their own benefit,’ Colorado’s state securities commissioner Tung Chan said in the lawsuit.
‘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.’
Prior to their crypto foray, the couple operated marketing business called Grace Led Marketing.
‘Eli and Kaitlyn were skilled, experienced marketers who had raised millions of dollars for others, they were not experienced coders,’ Chan alleges.
Fearing a crash similar to a run on a bank, the couple shut down the operation for good last year. Regalado had previously stated that ‘God reminds’ him that it is ‘impossible to mess this up’ since he had divine backing.
The now defunct Kingdom of Wealth exchange website boasted that the platform had been audited by cybersecurity firm Hacken.
However, it failed to disclose that Hacken had awarded their company a zero out of ten, Chan said.
On Wednesday, Judge David Goldberg ordered that the Regalados’ accounts be frozen for 14 days and banned them from selling securities in Colorado.
They face civil charges rather than criminal, meaning if found liable they will face fines rather than any jail time.
In a statement, Regalado addressed the lawsuit and said the ‘charges are true’ and that the company ‘ran out of money’ whilst ‘sowing’ money.
But he claimed to merely be carrying out the Lord’s will and said he hoped ‘God is going to work a miracle in the financial sector’.
‘We were always under the impression that God was going to provide, that the source was never ending, that God was doing a new thing and we have nothing to worry about and we have the track record to prove it,’ Regalado said.
‘When the exchange hit and things started falling apart, I’ll be honest Kaitlyn and I started turning on each other. We were at a minimum 4x upside down at the very beginning.
‘I said Lord I don’t know how to do this, I don’t have any experience in this industry, I don’t want to be caught up in something and this is where we are right now. Either I misheard God […] or God is still not done with this project.’
He also urged followers not to get ‘mad’ at the SEC lawyers.
‘We sold a cryptocurrency with no clear exit, ‘Regalado said. ‘We did, we took God at his word and sold a cryptocurrency with no clear exit. So the prosecutors have to take that.
‘We are going to go to court and argue our case and say this is why we did it and this is all the journal entries leading up but we’re saying yes we did do this.’