Colorado pastor and wife ordered to repay $3.4M to victims of their crypto scam
A judge ruled that Eli and Kaitlyn Regalado used faith and fake coins to defraud more than 300 Christians
This newsletter is free and goes out to over 22,000 subscribers, but it’s only able to sustain itself due to the support I receive from a small percentage of regular readers. Would you please consider becoming one of those supporters? You can use the button below to subscribe or use my usual Patreon page!
A Colorado pastor and his wife have been banned for 20 years from participating in private securities transactions—including crypto—and ordered to pay back the nearly $3.4 million they stole from more than 300 followers while they ran an illicit cryptocurrency exchange. They still could face lengthy prison sentences.
I last wrote about this couple two months ago after a grand jury indicted them on 40 felony criminal charges of theft, securities fraud, and racketeering. (That’s a separate case, by the way!)
It’s a far cry from the days when money-loving preachers would con their followers by convincing them they were sowing a seed into The Kingdom™.
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.
As a press release from the Colorado Division of Securities explained in January of 2024:
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 of 2023. 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 never came. Law enforcement officials did.
The question, though, is how they even pulled off this alleged scam. A scan of their old crypto website suggested 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 (now-removed-from-the-internet) 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 meant.
After several months of hyping the launch of the product, there were even more updates discussing all the problems with the launch.
And then in early 2024, after the lawsuit was filed, Eli Regalado offered a video response to all the news articles about the alleged scam. It was absolutely glorious. The full video is no longer online but here’s the first half of it:
Regalado 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 was just hoping for a miracle.
That miracle didn’t come before the lawsuit was filed and there hasn’t been one since. As securities commissioner Tung Chan explained at the time, “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.”
“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 alleged 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 at least raise 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 wasn’t a surprise.
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 pouring 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 greedy 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.
Over the past year, while their scam was under the microscope, Eli Regalado has just been posting through it. He made a video last year (at a fancy pool, apparently) rationalizing why he didn’t do anything wrong, and saying of the securities commissioner, “You are a liar, liar, liar… I hope you get back in the office after your holiday and you see this and you see what you’ve done. Shame on you!… You’re a crook.”
… only to post an apology for his “tone” a mere two days later:
All of that involved a bench trial in which Chan was seeking, among other things, a hold on their assets and $3.4 million in restitution. She wanted to get as much of this money back into the hands of the people who were screwed over. That civil trial ended in May. As it stands, the couple can’t sell their garbage coin in the state, nor can they access any of their crypto funds.
That judge’s decision has finally been issued.
Last Friday, Denver District Court Judge Heidi L. Kutcher sided with Chan and agreed that the Regalados “committed securities fraud in violation of the Colorado Securities Act.”
“The defendants’ lack of understanding of the harm they have caused to their investors, coupled with their admitted desire to continue and expand the INDXcoin scheme, leads the court to conclude that (a ban on selling) is appropriate,” Judge Heidi Kutcher wrote Friday.
…
“The defendants’ assertions of the ‘value’ of INDXcoin were misleading at all points of the offering; merely ascribing an algorithmic value to a coin does not make it worth that,” Kutcher wrote last week. “The coin was never going to be worth what the algorithm stated.
“Rather than coming clean, defendants then made multiple posts and communications to their investors, assuring them that the exchange would come back online and that each investor would be able to sell their coin,” she added. “Defendants knew this was not true.”
Nathanael Enos, a friend of the couple who was also part of the scam, was also banned from selling crypto and ordered to pay an additional $19,600 in penalties.
The Securities Commission announced the victory on Tuesday.
"The Regalados are 21st century false prophets who leveraged the new and promising technology of cryptocurrencies to run an old-fashioned scam, victimizing their own congregants and others,” said Commissioner Chan.
“The Colorado Securities Division works hard to prosecute securities fraud throughout the state. This case of a local pastor scamming Coloradans right here in our cities and towns is the kind of case that shows why we need state regulators on our home front who will fight for small investors, the regular people who are just trying to pay bills, save for retirement, put food on the table. The cryptocurrency market has expanded to over $4 trillion and with it come scammers. When crypto frauds are hitting home, that's where we are. The Court's holding is a win for Colorado investors, for justice and fair play, and for every legitimate cryptocurrency project out there. We are proud to be part of this work.”
Meanwhile, Eli Regalado told the Denver Post a lot of words, none of which included the word “sorry”:
“On behalf of all INDXcoin holders, our heavenly Father, in whom we serve, will deliver us,” Eli Regalado said by email Monday, quoting from the Bible: “Now when Daniel knew that the document was signed, he entered his house and he continued kneeling on his knees three times a day, praying and giving thanks before his God, as he had been doing previously.”
That comes after both he and his wife said during the trial in May that they were not criminals because “Many people got saved by this project” and that people gave them money to join in religious fellowship, not because they were investing in their financial futures.
This isn’t the end of the case for the Christians, though, because they still face criminal charges stemming from that grand jury indictment. It’s unclear how much jail time they could face when all is said and done.
The irony in all this is that Chan, the Securities Commissioner, has done so much more for those Christian believers than the pastors and their promises ever gave them. Now we wait to see if the criminal prosecution lands them in prison. Maybe then their victims can finally get some justice.
Let’s appreciate, though, how Judge Kutcher threw Eli’s religious ramblings right back at him:
“Throughout the proceedings, Mr. Regalado offered this quote: ‘I will put the key of David on his shoulder. What he opens, no one will shut,’” Kutcher recalled from the trial and the pastor’s use of a passage from Isaiah. “Mr. Regalado related this quote to overcoming challenges.
“The quote seems apt, but for different reasons. Here, the Regalados used INDXcoin to open up a revenue stream and then closed that revenue to others when they closed Kingdom Wealth Exchange, leaving hundreds of people without a door to retrieve their investment.”
(Portions of this article were published earlier)
I’m no Warren Buffett but I did spend a career in finance and, just like WB, I never understood what crypto was all about. Other than a way to facilitate illegal activities.
It’s a solution in search of a problem. To the extent that people have made money owning and selling it, I suspect it is almost entirely a matter of the Greater Fool strategy.
What? Dishonest Christians scamming congregants out of their money??? Hmph. Another day that ends in "Y."
Let's be real here: bible-thumpers have been separating marks from their money practically since religion was invented. Crypto is just the latest BS scheme pressed into service. The Regalados just followed the playbook.
And got caught. 😝