A Colorado pastor accused of pocketing $1.3 million in cryptocurrency scam says the Lord encouraged him to use funds for a home remodel

Eli Regalado and his wife, Kaitlyn Regalado, are being sued in Denver District Court by Colorado Securities Commissioner Tung Chan, who accused the couple of targeting Christians to invest in their cryptocurrency INDXcoin, despite it being “illiquid and practically worthless,” according to a press release from the Colorado Department of Regulatory agencies.

Local outlet BusinessDen first reported on the lawsuit on Thursday.

“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,” Chan said in a press release. “New coins and new exchanges are easy to create with open-source code. We want to remind consumers to be very skeptical.”

The lawsuit seeks to recoup losses that Chan claims investors incurred and have a constructive trust placed on the remodeled home — a court remedy for those found liable for unjust enrichment.

In a Friday response on the INDXcoin website, Regalado spoke about the lawsuit, saying that it was true that they had ‘sold a cryptocurrency with no clear exit,’ but stated that God directed him and that missteps were made due to inexperience. Regalado also noted that his goal was to get investors their money back.

“So the charges are that Kaitlyn and I pocketed $1.3 million, and I just want to come out and say that those charges are true,” Regalado said in his video address. “So there’s $1.3 million that’s been taken out of — I think it was a total of 3.4 million. But out of that 1.3, half a million dollars went to the IRS and a few $100,000 went to a home remodel that the Lord told us to do.”

The Regalados declined to comment to Business Insider.

A crypto investment better than heaven

Regalado operates the online Victorious Grace Church, which has no physical location. In August of 2022, he came to his congregation over a video call to deliver a message that the Lord instructed him to get into cryptocurrency, per court documents obtained by Business Insider. He and his wife founded INDXcoin and Kingdom Wealth Exchange — a platform to buy and sell crypto.

“It was last October ’21 that the Lord brought this cryptocurrency to me,” Regalado told his congregation over video broadcast, per court documents. “He said ‘take this to my people for a wealth transfer.'”

Chan writes in the complaint that Regalados sold nearly $3.4 million in crypto in 2022 and part of 2023. Per the complaint, the couple assured prospective investors that INDXcoin was “safer than other currencies.”

Chan writes in the lawsuit that around 30 million coins were in circulation, sold for $1.50 a coin, with the promise that each coin was worth at least $10. The Regalados had, at most, $30,000 backing the coins — far less than the $300 million worth of assets they should have had.

Regalado addressed why he valued the coins at 10 times the amount: The Lord told him to.

“If someone bought $1,000 worth of INDXcoin, we would basically give them an INDX amount of $10,000 — so 10x on top of it,” Regalado said. “And I’m like, ‘Where’s this liquidity gonna come from’ and the Lord says, ‘Trust me.'”

According to the complaint, Kingdom Wealth Exchange and INDXcoin were eventually shut down in November of 2023 because they did not have the liquidity available.

The Regalados assured investors worried about their money that it would soon come.

“Stay in INDXcoins…just take that word as gospel truth and execute on that word and do not worry about how the money’s going to happen. I really believe you’re going to see a miracle in very short order,” Regalado told investors in a video call, per the lawsuit.

However, the Regalados had pocketed at least $1.3 million in investor money to spend on luxury items, cosmetic dentistry procedures, an au pair, home renovations, and boat and snowmobile rentals, per financial records subpoenaed by Chan’s office. The couple also used investor funds to finance a Range Rover and pay off a loan on a Ford F-150.

According to court documents, an additional $290,000 was sent to their online church — of which the couple are the sole beneficiaries. The lawsuit claims the Regalados told investors they were sowing this money into charitable causes.

“Defendants have ensured that the investors will never recoup their funds because they took the investment money for their own benefit,” the lawsuit reads.

Judge David Goldberg, overseeing the civil case against the Regalados, ordered their bank accounts be frozen for 14 days and that the couple stop selling securities in the state while the case continues.

The couple has an upcoming hearing on January 29.