Christian pastor and wife sued over alleged cryptocurrency fraud scheme
Eli and Kaitlyn Regalado promised God would deliver a miracle... while pocketing over $1.3 million
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I’m old enough to remember when grift-loving preachers would con their followers out of millions of dollars just by convincing them they were sowing a seed into The Kingdom™.
Now, a Colorado pastor and his wife have been sued over a crypto-currency scheme in which they raised over $3.2 million from more than 300 people... for a product that was deemed literally worthless.
Eli and Kaitlyn Regalado ran the online-only Victorious Grace Church before launching a much more lucrative grift: selling Christians a different kind of invisible salvation.
The complaint alleges that Regalado targeted Christian communities in Denver and claimed that God told him directly that investors would become wealthy if they put money into INDXcoin.
The Regalados had no experience in cryptocurrency which was clear when a third-party auditor’s report allegedly described their INDXcoin code as unsafe, unsecure and riddled with serious technical problems. Despite that report, the Regalados allegedly continued to promote the INDXcoin as a low risk, high profit investment.
The complaint alleges that in reality, the INDXcoin was illiquid and practically worthless; investors lost millions; and Defendants dissipated investor funds to support their lavish lifestyle.
And what a lavish lifestyle it was:
[Tung Chan, the state’s securities commissioner,] 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.
INDXcoin and the “Kingdom Wealth Exchange” (on which the coins could be bought and sold) were shut down on November 1. Eli Regalado urged investors not to panic: “I really believe you’re going to see a miracle in very short order,” he told them.
The miracle didn’t come. Law enforcement officials did. Which means the Regalados may want to start putting together their inevitable prison ministry.
The question, though, is how they even pulled this alleged scam off. A scan of their crypto website suggests a fairly simple answer: They used a lot of big technical words that normal people wouldn’t understand in order to bring in supporters, sprinkled in plenty of God talk, and told people to just trust them.
Here’s a typical example of a post from 2022:
In another update peppered with Bible verses, Regalado literally admitted one of his critics who was telling people to stay away from them had a point: “I saw a post online from a fellow believer who warned his community about this project, saying the math didn’t add up. If you see this, brother, you are right... it doesn’t.”
They even appeared on a talk show hosted by right-wing extremist preacher and former state legislator Gordon Klingenschmitt in order to promote their grift to more Christians.
Throughout it all, people who gave them money for the crypto coins were promised riches.
A white paper produced to market the coin said very clearly that Christians were the target market: “With over 2.18 billion Christians spread across over two hundred countries around the globe, the INDX platform has as one of its specific aims to become the platform of choice for every believer while also helping inspire and strengthen their spiritual lives.”
How would it “inspire and strengthen their spiritual lives”? No clue. The paper didn’t address that. But to prove that it was founded on Gospel principles, the paper listed both the Operations Team (including two guys, “Jose” and “Oscar,” whose real names were not provided but whose bios said they were the “lead developers”)… and a “Prophetic Team” that included a woman who “serves as a prophetic voice for INDXCoin's spiritual intelligence team”… whatever the hell that means.
After several months of hyping the launch of the product, there were even more updates discussing all the problems with the launch.
And on Saturday, after the lawsuit was filed, Eli Regalado offered a video response to all the news articles about the alleged scam. It’s absolutely glorious:
He explained that the reason INDXcoin was being called “worthless” was because… investors can’t cash out right now, so, yes, true.
What about the claim that he pocketed $1.3 million? Also true, he said, though he assured everyone that “half 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.” So, you know, stop being mad at him.
He didn’t mention that $290,000 was put into the bank account for his online-only church. (For what? A new webcam?)
He eventually said that, every time there was a snag, he just assumed God would take care of everything. No responsibility on his end. Just faith-based vibes.
At one point, he even said he prayed to God, “Lord, I don’t want to do this. I don’t know how to do this. I don’t have any experience in this industry. I don’t know what I’m doing. I don’t want to be caught up in something…” And yet he just kept going along with it.
His conclusion? “Either I misheard God… [or] God is still not done with this project.”
He said he’s just hoping for a miracle.
It didn’t happen before the lawsuit was filed and there’s no reason to think it’s coming now. The state’s securities commissioner, who has a much better track record, isn’t worried about an incoming miracle either:
“We allege that Mr. Regalado took advantage of the trust and faith of his own Christian community and that he peddled outlandish promises of wealth to them when he sold them essentially worthless cryptocurrencies,” said Commissioner Chan. “New coins and new exchanges are easy to create with open source code. We want to remind consumers to be very skeptical.”
…
“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.
What’s especially important to recognize is that the state alleges the Regalados knew they were spreading lies:
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.
When your pastors tells you to invest in God’s Kingdom by way of his personal Venmo account, it should raise at least a few red flags.
Ultimately, this cryptocurrency was just like every other form of Christian media. It was marketed as an alternative to something the secular world already offered but ended up being a cheap, if not worthless, imitation. Still, the people at the top of the pyramid reaped the benefits all thanks to the Christians who were even more gullible than them.
In a way, this is to be expected.
Churches offer the same sort of product: Invest in our God and you’ll be rewarded in the long run. Keep praying. Keep tithing. Keep spreading the Word. Things will get better… eventually. Some people figure out it’s all a scam and walk away before puring even more of themselves into the ministry. Some people have doubts but prefer remaining duped for life because it gives them hope and a community. Others never catch on at all.
The problem with the Regalados is that they were too dumb to stick to the age-old playbook. Instead of just selling God, where promises can be overdelivered with no oversight or accountability, they sold an actual product. And now they’ve been caught.
The Regalados’ first court appearance for the securities fraud trial is scheduled for next Monday in Denver. Last Wednesday, according to the Denver Post, the couple’s bank accounts were all frozen for at least two weeks… perhaps to prevent them from taking whatever they have left and stashing it away somewhere.
Chan says he’s going to try and recoup at least some of the investments for the people who were allegedly defrauded. If he’s able to do that, he’d be giving those people far more than the pastors and their promises ever delivered.
Another Christian grifter scheme gone south. Another day that ends in "Y."
Not to toot my own horn, but I was leery of the whole bitcoin thing when I first heard about it. Reminded me too much of the whole "something-for-nothing" cons which are a LOT older, though just as nefarious. And yeah, it's a Monday and yeah, I've had my coffee, but no, I really can't get all that worked up about another in what seems to be an endless parade of confidence games run by believers, aimed at enriching a few at the cost of the many.
Same stuff, different day.
I can't bring myself to have a whole lot of sympathy for people who take financial advice from a preacher. Not that their financial advice is going to be a lot worse than their advice on every other subject.