Eligio “Eli” Regalado and his wife Kaitlyn Regalado have been charged with civil fraud offences by the Colorado Division of Securities after their cryptocurrency INDXcoin raked in almost $3.2m from more than 300 people, according to a press release by the Colorado Department of Regulatory Agencies.
The complaint alleges the couple “created, marketed and sold a cryptocurrency” to members of the Christian community.
Mr Regalado, who preaches for the online-only Victorious Grace Church, targeted believers, telling them that God had told him investors would end up wealthy if they put money into INDXcoin, the complaint alleges.
The couple also allegedly filled presentations with prayers and quotes from the Bible, telling investors that investment would lead to “abundance” and “blessings”.
They also allegedly offered their cryptocurrency through an online exchange platform, called “Kingdom Wealth Exchange” (KWE), which they created and controlled themselves.
The Colorado Division of Securities alleges that the couple had no prior experience in dealing with cryptocurrency and a third-party auditors report found the INDXcoin code to be “unsafe, unsecure and riddled with serious technical problems”.
However, despite the cryptocurrency being “illiquid” and “practically worthless, the Regalados are accused of continuing to promote it as a low-risk, high-profit investment.
“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,” said Tung Chan, the Colorado Division of Securities commissioner, in the statement.
“New coins and new exchanges are easy to create with open-source code. We want to remind consumers to be very sceptical.”
Hundreds of people have allegedly lost millions in the scheme, while the Regalados used the investor funds to pay for “their lavish lifestyle”, the commissioner said.
According to the complaint, from the Colorado Department of Regulatory Agencies, the couple spent tens of thousands of dollars on jewellery, luxury handbags, cosmetic dentistry and clothes.
They also splashed out on boat rentals, renovations to their home, and a Range Rover, but “most gallingly”, they transferred hundreds of thousands of dollars to their church, the complaint states.
Mr Regalado spoke to his INDXcoin community in a video statement and allegedly admitted to spending money on home remodelling on the Lord’s instructions.
“Out of that $1.3 (million), half 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,” he said in the video posted on Friday, according to The Associated Press.
He also claimed that God appeared to him in a dream, giving him advice on how to run the cryptocurrency exchange.
God will work out a miracle to sort out the project, he claimed.
“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 the video, reported CNN.
“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 Independent could not independently verify the video as it appears to be private to members only.
An action was filed against the couple in Denver District Court seeking preliminary and injunctive relief, damages for investors, and a constructive trust to be placed on the couple’s property.
The Colorado Division of Securities has asked anyone who has invested in INDXcoin to contact them.
The Independent has contacted Mr Regalado via an email on the INDXcoin YouTube page.