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WTF?! "God told me to do it," is a line espoused by some criminals as an excuse for their crimes, but Colorado pastor Eli Regalado is probably the first person to use it as a reason for pocketing money he made in a crypto scam.
Online pastor Regalado and his wife, Kaitlyn, are accused of defrauding more than 300 investors out of $3.2 million via a cryptocurrency they created called INDXcoin. Regalado admits that half of this money was used for the couple's personal benefit, but he seems to be pointing the finger of blame at God, though he might have misheard the Lord.
When Regalado announced on his YouTube channel that he was going to start selling crypto last April, he said that God was backing the project and that he was "setting the rails for God's wealth transfer."
Regalado and his wife sold INDXcoin through an online crypto marketplace called Kingdom Wealth Exchange that Eli created, controlled, and operated.
Using sales pitches filled with Bible quotes and claims that the coins were valued at $10 - $12 but available for $1.50 or less, they raised $3.2 million.
According to Colorado state regulators, INDXcoin was "essentially worthless." While investors lost millions, the couple used at least $1.3 million of the money they received on vacations, a Range Rover, jewelry, luxury handbags, cosmetic dentistry, clothes, and an au pair. They also spent a huge sum on home renovations, and at least $290,000 went into their online-only church, Victorious Grace Church.
Regalado did not deny that the pair used the money for their own gains. "The charges are that Kaitlyn and I pocketed 1.3 million dollars, and I just want to come out and say that those charges are true," he said in a video statement a few days after the civil charges were filed. "A few hundred thousand dollars went to a home remodel that the Lord told us to do."
"We took God at his word and sold a cryptocurrency with no clear exit."
The Regalados marketed their coin as a low-risk, high-reward investment. Eli even claimed the Lord had told him people would become wealthy if they invested.
The pair's lack of experience in crypto became obvious when a third-party auditor's report allegedly described their INDXcoin code as unsafe, insecure, and riddled with serious technical problems. This was before the coin launched, yet they continued to promote it. When investors failed to reap the promised rewards, Regalado said they just had to wait for God's plan to unfold.
The state says the INDXcoin was not backed by assets and there was no market beyond its pool of investors. The couple also failed to explain how the market would work and that their own Kingdom Wealth Exchange was the only platform where the coin could be bought, sold, or traded.
In a video addressing the accusations, Regalado said "We launched an exchange [...] The exchange technology failed. Things went downhill. And from that point forward, we've just been waiting on the Lord."
"I know this looks bad," he added. "I know this looks terrible." The pastor also said that about half a million dollars of investors' money was used to pay taxes to the IRS.
It appears that Regalado hasn't lost his faith that God will help him and INDXcoin investors out of this hole.
"Either I misheard God … or God is still not done with this project, and He is going to do a new thing," he said in a recent video. "What we're praying for, and what we're believing for still, is that God is going to do a miracle. God is going to work a miracle in the financial sector … [and that] everyone [who invested] … is going to be able to receive money back."
The Regalados face civil fraud charges for allegedly violating the anti-fraud, licensing and registration provisions of the Colorado Securities Act.