Colorado-based pastor Eligio “Eli” Regalado and his wife, Kaitlyn, are under legal scrutiny for purportedly defrauding investors of millions through the sale of an unregistered crypto token, named INDXcoin.
The token, marketed as a “God-backed” digital asset to devout Christians, reportedly garnered $3.2 million in sales through their online church, Victorious Grace.
The Colorado Securities Commissioner has filed a lawsuit, accusing the couple of fraudulent activities and illegal sale of securities without proper registration. Consequently, a Colorado judge has frozen the assets of Victorious Grace Church.
Despite claims by the Regalados that INDXcoin was backed by a cryptocurrency index, the state alleges the token had minimal backing, relying primarily on the couple’s assertion of divine support.
Initially arguing that INDXcoin was a utility token exempt from securities regulations, experts deemed it a security. Undeterred, the couple maintained God’s designation of it as a utility token.
Investors expressing concerns were urged by Eli Regalado to hold onto their investments, citing divine guidance. The Regalados also controlled the exchange platform, which regulators claim was routinely shut down to prevent a bank run.
Last year, the couple closed the exchange, instructing investors to remain invested, citing divine instructions. During their fundraising, $1.3 million was allegedly misappropriated for personal expenses.
In a video, Eli Regalado admitted to charges, claiming a significant portion went to the IRS and a home remodel instructed by God. The couple is set to appear in court on January 29 for a hearing on the preliminary injunction.
This case adds to the ongoing debate on cryptocurrency regulations, with recent legal battles questioning the SEC’s authority over various aspects of the market.
Source: cryptonews
