Crypto for Christ? Colorado pastor and wife indicted in $3.4M INDXcoin scam

Eli and Kaitlyn Regalado used faith and fake coins to rob more than 300 Christians blind. They now face 40 criminal charges.

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A Colorado pastor and his wife have been indicted on 40 counts relating to their multi-million-dollar cryptocurrency scam. After bilking more than 300 followers of nearly $3.4 million, they could face lengthy prison sentences, and it’s not even the end of their legal concerns.

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.

Eli and Kaitlyn Regalado (screenshot via YouTube)

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 and the judge’s decision is expected later this summer. As it stands, the couple can’t sell their garbage coin in the state, nor can they access any of their crypto funds.

But now, there’s another concern for the Regalados because, on Tuesday, Denver District Attorney John Walsh announced that the couple had been indicted by a grand jury on 40 felony criminal charges of theft, securities fraud and racketeering. (Nearly half of those charges are theft, with witnesses saying they were screwed out of amounts ranging from $10,000 to $200,000.)

The charging document says:

Eli and Kaitlyn Regalado made material misstatements to prospective and current investors regarding the investments in INDXcoin, including: that the investments were safe and not risky despite being backed with essentially no assets; that the coins were highly sought after and offered an unparalleled risk-to-return ratio; that the coins represented an indexbased cryptocurrency that tracks and indexes the value of the top one hundred cryptocurrencies. An index-based investment is understood to mean a portfolio of investments meant to mimic the performance of an index. The Defendants represented their coins as an index of the top 100 cryptocurrencies and used technical sounding terms to confuse investors when in fact the coins were essentially backed by no assets whatsoever; that the INDXcoin was valued between $10-$16 at purchase.

The Regalados are scheduled to appear in court today for a bail hearing. After that, they’ll enter their plea (I assume “not guilty”) and, if the Regalados don’t negotiate their way out of it, a trial will eventually get underway. It’s unclear how much jail time they could face when all is said and done.

A spokesperson for the Colorado Division of Securities told me these two cases—the civil and criminal trials—are separate even if the two departments work together.

That said, Chan claimed last year that she was going to try and recoup at least some of the investments for the people who were allegedly defrauded. If she’s able to do that, she’d be giving those people far more than the pastors and their promises ever delivered. And if the criminal prosecution lands them in prison, their victims would finally get some justice.

The Regalados may want to start putting together their inevitable prison ministry.

(Portions of this article were published earlier)

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