SEC Freezes Assets of Church for Selling Unregistered ‘God-Backed’ Crypto Token
Colorado-based pastor Eligio “Eli” Regalado and his wife, Kaitlyn, are facing legal action after allegedly defrauding investors of millions of dollars through the sale of an unregistered crypto token, called INDXcoin.
The token was marketed to devout Christians as a “God-backed” digital asset.
The couple reportedly raised around $3.2 million through sales of the token, which they issued through their online church, Victorious Grace.
The Colorado Securities Commissioner filed a lawsuit against the Regalados, accusing them of fraudulent activities and illegal sale of securities without proper registration.
As a result, a Colorado judge has frozen the assets of Victorious Grace Church.
According to legal filings, the Regalados claimed that INDXcoin was backed by a cryptocurrency index and had sufficient assets to secure its value.
However, the Colorado Securities Commission alleges that the token had little to no backing, aside from the couple’s claim that it was supported by God’s guarantee of success.
“Defendant Eli leveraged the potential investors’ faith,” the complaint said. “He stated that their investments’ success was guaranteed by God.”
The Regalados initially argued that INDXcoin was a utility token rather than a security offering, thus claiming exemption from securities regulations.
However, experts refuted their claim and stated that the token qualified as a security.
Undeterred, the couple claimed that God deemed INDXcoin a utility token.
Investors who expressed concerns about the lack of returns were urged by Eli Regalado to hold onto their investments, citing divine guidance.
The Regalados also controlled the Kingdom Wealth Exchange, the platform through which INDXcoin could be exchanged for USD.
Colorado regulators
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