Investigators accused the couple of violating Colorado's anti-fraud and licensing and registration laws. They claimed that cryptocurrency was promoted as a “low-risk, high-reward investment” when in fact it was “illiquid and practically useless.” It is usually possible to convert cryptocurrency into cash or other currencies through a digital platform or trading exchange.
“God said, ‘I want you to build this,’” Regalado said. “We took God at His word and sold cryptocurrency with no clear way out.”
“We allege that Mr. Regalado exploited the trust and faith of his Christian community, and that he sold them outlandish promises of wealth when he sold them worthless cryptocurrencies,” Colorado Securities Commissioner Tong Chan said in a statement.
While investors lost millions of dollars, the Regalados used the money to support their “lavish lifestyle,” the filing alleged. The statement added that the couple sold digital assets to more than 300 investors between June 2022 and April 2023.
In the video message, Regalado confirmed that he and his wife made $1.3 million from the sale of cryptocurrency, of which they spent “a few hundred thousand dollars” on “the house remodel that God asked us to do.”
“Either I misheard God, and every one of you, who prayed and entered, did too. Or second, God is not finished with this project yet,” Regalado said.
Despite having no previous experience trading cryptocurrencies, Regalado said he was inspired to sell INDXcoin because “God is in the business of doing new things and breaking seals. He asked us to do this.”
I said: Lord, I don't want to do this. I don't know how to do this. I have no experience in this industry. I do not know what to do. I don't want to get involved in anything.”
Investors who purchased INDXcoin were later unable to convert the cryptocurrency into cash due to technical glitches, according to Regalado. “We launched the exchange. The exchange technology failed. Things have gone downhill,” the priest said. “I know this sounds terrible.”
In a post in November in which he announced that the cryptocurrency network and its exchanges would remain offline “for the time being,” Regalado said the failure of the scheme had had a negative impact on his mental health. He suggested investors “stop chasing money” and “remove all negative talk about the community,” which he complained was being inundated with negative comments.
The statement from the Colorado Securities Commissioner said the Regalados had “no experience with cryptocurrencies,” something that became clear when “a third-party auditor’s report described their INDXcoin code as unsafe, insecure, and riddled with serious technical issues.”
“It's easy to create new coins and new exchanges using open source code. We want to remind consumers to be very skeptical,” Chan said.
