A judge in Colorado determined that Denver pastor Eli Regalado and his wife, Kaitlyn, defrauded many investors by selling cryptocurrency associated with the couple’s church.
The judge with the Denver District Court made the ruling last Friday, finding the couple in violation of Colorado’s state securities laws and ordering them to pay back $3.39 million.
According to the Colorado Division of Securities, the Regalados had raised money from at least 509 investors in an INDXcoin and 87 investors with a Sumcoin, promoting their project with a religious narrative.
Last week’s ruling is the end result of a bench trial in May when prosecutors argued the couple misled investors on purpose.
Religious Framing Central to INDXcoin Marketing
According to court records, the Regalados alleged that “God” told them to establish and sell INDXcoin, which they characterized as a God-induced opportunity for a financial benefit.
They even organized a “Prophetic Team,” which conducted conference calls up to five times a week to provide counsel to the Regalados, purportedly based on religious-based revelations.
This Prophetic Team even prayed over significant business decisions, placing the crypto scheme in a religious frame of reference.
This strategy might have initially worked to convince church members and other investors to invest, but the Court determined that the faith-related solicitation was used to hide the fraud behind the token and exchange.
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Misrepresentation and Worthless Tokens
Judge Kutcher determined that INDXcoin qualified as a security under Colorado law and that the Regalados had made misrepresentations about its safety and value.
They told investors the token was a safer alternative among other cryptocurrencies and that investors would make profits, even though trading was not possible with the legitimate exchanges.
While there are listings on Phantom, Bitget, and BscScan for a token called “INDXcoin,” there has been no confirmation of an official contract address that can be inherited by the Regalados.
In his opinion, Kutcher stated directly: “INDXcoin had no value because no one wanted to buy it.”
Personal Spending Exposed in Court Evidence
In addition to misrepresentation, the financial records indicated that the couple had misappropriated investor funds for their personal benefit.
They spent over $1.3 million of the money that had been raised—notably on luxury spending, which included handbags, jewelry, trips, cars, home repairs, and contributions to their own church, Victorious Grace.
The court observed that there were “no parameters” regarding how much of the investor funds the Regalados were spending.
This, the court found, provided a pattern of misuse that only further undercut their claims of operating for spiritual or community benefits.
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Civil Ruling Adds to Pending Criminal Case
The Regalados are banned from involvement in securities for the next 20 years by the civil ruling and must pay restitution to investors for losses.
The civil judgment is separate from their pending criminal case. In July, a grand jury in Denver indicted the couple on 40 counts of felony, including racketeering, securities fraud, and theft, according to reports.
They are out on a $100,000 bond and await plea hearings. If convicted, they could face prison.
Recently, UnoCrypto reported that a U.S. racketeering case involving a $263 million bitcoin scam.
Also, we reported that a Ponzi scheme operator who defrauded investors out of $12.5 million had his bankruptcy protection denied in a September ruling.
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