Investigators accused the couple of violating Colorado’s anti-fraud, licensing and registration laws. They alleged the cryptocurrency was promoted as a “low risk, high profit investment” while it was actually “illiquid and practically useless.” Cryptocurrency is usually able to be converted into cash or other currencies through a digital platform or trading exchange.
“The Lord said: I want you to build this,” Regalado said. “We took God at his word and sold a cryptocurrency with no clear exit.”
“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,” Colorado Securities Commissioner Tung Chan said in a statement.
The filing alleged that while investors lost millions of dollars, the Regalados used the funds to support their “lavish lifestyle.” The couple sold the digital asset to more than 300 investors between June 2022 and April 2023, the statement added.
In the video message, Regalado confirmed that he and his wife made $1.3 million from selling the cryptocurrency, of which they spent “a few hundred thousand dollars” on “a home remodel that the Lord told us to do.”
“Either I misheard God, and every one of you who prayed and came in — you as well. Or two, God is still not done with this project,” Regalado said.
Despite having no prior experience in trading cryptocurrencies, Regalado said he was inspired to sell INDXcoin because “God is in the business of doing new things and breaking seals. And he did tell us to do this.”
“I said: Lord, I don’t want to do this. I don’t know how to do this. I don’t have any experience in this industry. I don’t know what I’m doing. I don’t want to be caught up in something.”
Investors who purchased INDXcoin were subsequently unable to convert the cryptocurrency into cash because of technical failings, according to Regalado. “We launched an exchange. The exchange technology failed. Things went downhill,” the pastor said. “I know this looks terrible.”
In a post in November announcing that the cryptocurrency’s network and exchange were to remain offline “for the time being,” Regalado said the failure had taken a toll on his mental health. He suggested investors “stop being ruled by mammon (chasing money)” and “remove all negative talk from the community,” which he complained was being flooded with negative comments.
The statement from the Colorado Securities Commissioner said the Regalados “had no experience in cryptocurrency,” something that became apparent when “a third-party auditor’s report allegedly described their INDXcoin code as unsafe, unsecure and riddled with serious technical problems.”
“New coins and new exchanges are easy to create with open source code. We want to remind consumers to be very skeptical,” Chan said.
Read More: Colorado pastor Eli Regalado faces civil charges for alleged crypto scam