A Colorado court has entered judgment against a Denver pastor and his wife after finding they defrauded hundreds of investors by selling crypto tokens created for their church.
The ruling, handed down last Friday in Denver District Court, found that Eli and Kaitlyn Regalado violated state securities laws and must repay $3.39 million, according to a statement from the Colorado Division of Securities posted Tuesday.
It follows a May bench trial where state attorneys said they raised funds from at least 509 INDXcoin investors and 87 Sumcoin investors. Decrypt reached out to the state securities regulator’s office for comment but did not immediately receive a response. Efforts were made to contact the Regalados and their church.
Per the judgment order seen by Decrypt, the Regalados’ marketing and creation story for INDXcoin claimed “that ‘God’ told them to create, sell, and sow” the token.
The ruling went on to describe how the Regalados assembled a “Prophetic Team” that met by conference calls as often as five times a week to receive updates on INDXcoin and its crypto exchange, Kingdom Wealth.
Prayers were made over key decisions, with the Prophetic Team advising the Regalados “based on what God was saying,” reinforcing the religious framing they used to promote the token, according to testimony cited in the case.
But the promises of spiritual guidance did not shield the couple from legal scrutiny.
INDXcoin qualified as a security under the Colorado Securities Act, per the court’s findings, with Judge Kutcher determining that the couple misrepresented its value, told purchasers it was safer than other cryptocurrencies, and assured them they would profit even though the token could not be sold on established exchanges.
Listings for a token named “INDXcoin” appear on Phantom (Solana), Bitget, and BscScan. However, the court filings do not list a contract address, so the listings cannot be confirmed as the same token in the Regalado case.
“INDXcoin was worthless because no one wanted to buy it,” the order stated.
Evidence also showed that the Regalados deposited investor funds into a bank account they controlled and used at least $1.3 million for personal expenses. Records detailed spending on luxury handbags, jewelry, vacations, cars, home renovations, and payments to their church, Victorious Grace.
“There were no parameters on the amount he or Mrs. Regalado would spend with the investor money,” the court noted.
In a separate criminal case from July, a Denver grand jury indicted the Regalados on 40 felony counts, including racketeering, securities fraud, and theft; both posted $100,000 bond and await plea.
Unlike the civil enforcement ruling, which ordered restitution and a 20-year securities ban, the criminal case could carry prison time if they are convicted.