A Colorado court has convicted a pastor and his wife for orchestrating a cryptocurrency fraud scheme totaling $3.34 million, a ruling that underscores the persistent risks of digital asset scams targeting religious and community groups. Judge Heidi L. Kutchery of the District Court found Eli and Kaitlyn Regalado guilty of defrauding over 300 individuals who invested in their token, INDXcoin, through a platform branded as Kingdom Wealth Exchange. The scheme, active from June 2022 to April 2023, promised financial security and prosperity, exploiting religious faith to lure unsuspecting investors.
The Regalados’ enterprise collapsed shortly after its launch, with the exchange failing within 24 hours and leading to the loss of investor funds. Despite a scathing auditor’s report assessing the system’s security at a mere “0 out of 10,” the couple continued to promote INDXcoin as a stable investment. Colorado Securities Commissioner Tung Chan highlighted that faith was a central element in the deception, with Eli Regalado leveraging his position within the Christian community to gain trust from individuals unfamiliar with cryptocurrency. This case illustrates how established fraudulent models, such as Ponzi schemes, can be repackaged with modern digital assets.
Court documents detail the misappropriation of funds, with the Regalados allegedly using investor money for luxury goods, vacations, jewelry, vehicles, and personal expenditures, including dental work. Eli Regalado reportedly admitted to spending the funds, citing taxes and home repairs he attributed to divine inspiration. The court’s decision not only declared INDXcoin a security under Colorado law, concluding the civil proceedings initiated in January 2024, but also signifies a step towards accountability.
Beyond the civil judgment, the Regalados face further legal challenges. A grand jury indicted them in July on 40 criminal charges related to the same scheme, carrying the potential for significant prison sentences in addition to financial penalties. For the defrauded investors, the ruling offers a symbolic vindication, though their financial losses remain. Regulators hope this outcome will serve as a potent warning against fraudulent schemes that exploit religious or technological promises.
This conviction is part of a broader trend of cryptocurrency-related fraud cases. Recently, Ramil Ventura Palafox, CEO of Praetorian Group International, pleaded guilty to wire fraud and money laundering charges for orchestrating a $200 million Bitcoin pyramid scheme that defrauded over 90,000 investors globally. In separate incidents, the Israeli Ministry of Defense confiscated 187 cryptocurrency wallets linked to the Islamic Revolutionary Guard Corps, and a hacker exploited a token on the Polygon network to transfer millions across blockchains. These events, alongside a $2.4 million hack of the Shibarium Bridge, underscore the persistent security and fraud risks within the digital asset landscape.
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