Denver pastor found guilty of $3M crypto scam built on religious claims

A Denver pastor and his wife were found guilty of duping hundreds of members of their congregation by selling worthless cryptocurrency tokens they claimed were divinely inspired.

A statement issued by the Colorado Division of Securities on Tuesday claims the Denver District Court has charged Eli and Kaitlyn Regalado, who operated an online-only church called Victorious Grace Church, with securities fraud and ordered them to pay $3.39 million in restitution.

Prosecutors concluded that the couple violated the Colorado Securities Act by selling a fraudulent cryptocurrency, INDXcoin, while misleading investors with religious appeals and false promises of financial gain.

Crypto scam in the name of God

Notably, the pastor and his wife marketed INDX coin to investors by claiming that ‘God’ told them to create, sell, and sow” the token, the statement notes. 

In reality, the couple used the money to fund an extravagant lifestyle that involved purchasing luxury cars, jewelry, high-end purses, and cosmetic dentistry, among other things.

During a bench trial held in May, Judge Heidi L. Kutcher, who was presiding over the case, found that the Regalados assured buyers that their token was safer than other cryptocurrencies and was destined to bring profits.

However, the court concluded that the coin was essentially worthless, could not be sold on any established exchanges, and was backed by no meaningful infrastructure or liquidity.

As such, Judge Kutcher has also imposed a 20-year ban on the couple from participating in securities offerings in the state.

Prosecutors also reviewed transactions related to Sumcoin, another cryptocurrency that the Regalados promoted. 

According to filings, at least 87 investors purchased Sumcoin, with the couple again making misleading claims about the token’s legitimacy and potential.

In total, Eli and Kaitlyn Regalado raised nearly $3.4 million from more than 500 investors.

Prosecutors argued that both coins were misrepresented as part of a spiritually guided financial mission and that investor funds were siphoned off for personal luxury.

The couple deposited large portions of the funds into their personal bank accounts, spending over $1.3 million on the aforementioned luxury items, home renovations, and payments to their church. 

The court noted there were “no parameters” on how the funds were handled, further solidifying the case that investors were misled not only about the risks but also about how their money would be used.

According to a testimony cited in the case, the pastor formed what the ruling described as a “Prophetic Team,” which advised the Regalados “based on what God was saying.”

INDXcoin was doomed from the start

The scandal first surfaced in January 2024 when the Colorado Attorney General’s Office filed a civil complaint alleging that the Regalados deliberately targeted Christian communities in Denver with promises of divine blessing and material prosperity in exchange for investing in INDXcoin and related ventures.

The couple had no background in cryptocurrency and failed to disclose that an audit had given INDXcoin a security rating of 0 out of 10.

At one point, the couple claimed each INDXcoin was worth at least $10 and that 30 million coins were in circulation, which would place the total market cap at a $300 million valuation.

But state investigators ultimately found just $30,000 worth of funds backing the token. 

Meanwhile, the Kingdom Wealth Exchange, a platform the Regalados created to host INDXcoin, collapsed after just one day of trading.

In April, the Denver District Court ruled that both INDXcoin and the way it was marketed met the legal definition of a security.

And in July, a grand jury indicted the Regalados on 40 felony counts, including securities fraud, theft, and racketeering.

They are currently out on bond and awaiting criminal trial, where prison time remains a real possibility.

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