State regulators can continue freezing the bank accounts of an online pastor from Denver and his wife who have admitted selling millions of dollars in worthless cryptocurrency.
Denver District Court Judge David Goldberg ruled Monday that Eli and Kaitlyn Regalado, along with their companies and church, cannot access their allegedly ill-gotten gains. He also barred the local couple from selling their cryptocurrency or other investments in Colorado.
“This case is a sad case for me. It’s one of the more egregious cases I have seen where someone in the name of faith, the name of God, preyed upon his congregants and he did so in the name of the lord,” the judge said. He called it “a case of just unmitigated greed.”
His decision followed a two-hour hearing and the testimony of state securities investigators.
“The red flags were their expenses for personal purposes,” Ioana Dobra, a fraud investigator with the Colorado Division of Securities, said of an audit of the Regalados’ bank accounts. “Jewelry purchases, vacations, airline tickets, clothing, and home remodeling.”
The Regalados did not attend the afternoon hearing. They said last week that they would be out of town and asked for it to be rescheduled. Goldberg declined to reschedule it.
The Regalados are being sued by the Colorado Division of Securities for securities fraud. Their charges are civil, not criminal, and punishable by fines rather than incarceration.
As BusinessDen first reported, Eli Regalado told online followers in 2022 that God had told him to create INDXcoin, a cryptocurrency, and the Kingdom Wealth Exchange, an online marketplace. Within one year, people bought $3 million to $4 million worth of the coins.
At least $1.3 million of that went directly to the Regalados, who spent it on a Range Rover, jewelry, luxury handbags, cosmetic dentistry, home renovations and an au pair, according to a lawsuit the Division of Securities filed Jan. 16. Meanwhile, the Kingdom Wealth Exchange closed down in November, leaving INDXcoin buyers unable to trade or sell.
“The Regalados looted investor funds,” Assistant Attorney General Sarah Donahue told Goldberg. She called them “seasoned marketers” who “cruelly manipulated people.”
Goldberg agreed Jan. 17 to freeze dozens of bank accounts, crypto wallets and Venmo accounts belonging to the Regalados, their companies and Victorious Grace Church for two weeks. Monday’s hearing was about whether that freeze should continue.
On Jan. 19, Eli Regalado posted a seven-minute video responding to BusinessDen’s article. The video has since been deleted from INDXcoin’s website and social media.
“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,” he said in the video. “There has been $1.3 million that has been taken out of a total of $3.4 million. Out of that, half of 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.”
Regalado described how, before INDXcoin, God told him to create a cryptocurrency, “that cryptocurrency turned out to be a scam,” and God then told him to create INDXcoin to make things right. Regalado recalled his deep skepticism at God’s commands.
“I said, ‘Lord, I don’t want to do this, I don’t know how to do this, I don’t have experience in this industry, I don’t know what I’m doing, I don’t want to be caught up in something,’” he said.
“One of two things have happened: Either I misunderstood God and every one of you who prayed and came in (did) as well, or God is still not done with this project.”
In the video, which was played in Goldberg’s courtroom Monday afternoon, Regalado urged his followers not to blame the Colorado Division of Securities for suing him.
“If you think about it, we sold a cryptocurrency with no clear exit. We did. We took God at his word and sold a cryptocurrency with no clear exit,” he said. “So, the prosecutors have to take that and say, ‘These people willingly sold a cryptocurrency with no clear exit.’ Now, we’re going to go to court, we’re going to argue our case, we’re going to say, ‘Here’s why we did it.’”
“God is not done with this project. God is not done with INDXcoin,” the pastor told parishioners. “Join us, believe, and receive everything that God has said about this project.”
