Good day everyone,
I hope you are all well and had an excellent weekend, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at the recent freezing of assets by the SEC against a Church for what they claim was selling unregistered crypto tokens.
“God-backed” Digital Asset
A church ran by pastor Eligio “Eli” Regalado and his wife, Kaitlyn, in Colorado are now facing egal action after allegedly defrauding investors of millions of dollars through the sale of an unregistered crypto token, called INDXcoin. They made the coin and sold it under the guise of being for devout Christians and that it was a “God-backed” digital asset.
The sale of the token managed to raise around $3.2 million for the couple, and they issued the token through their online church, Victorious Grace. The Colorado Securities Commissioner had a lawsuit filed against the Regalados and it stated they had taken part in fraudulent activities and the illegal sale of securities without proper registration as part of the accusations. Judge David Goldberg in Colorado has since frozen the assets of Victorious Grace Church.
In their legal filings the Regalados claimed that INDXcoin was backed by a cryptocurrency index and had sufficient assets to secure its value. The Colorado Securities Commission alleges the token was virtually unbacked as there was only the couple’s claim that it was supported by God’s guarantee of success. As part of the filing the complaint stated:
“Defendant Eli leveraged the potential investors’ faith. He stated that their investments’ success was guaranteed by God.”
At the beginning the Regalados had agreed that NDXcoin was a utility token rather than a security offering. In this regard the token was exempt from securities regulations. Experts have refuted their claim and stated that the token qualified as a security. The couple maintain that stance and that the token is deemed a utility token by God.
There are investors who are concerned regarding the lack of returns and that pastor Eli Regalado had urged them to hold onto their investment as it was divine guidance. The Kingdom Wealth Exchange, the platform through which INDXcoin could be exchanged for USD, is controlled by the couple. Colorado regulators allege that the couple routinely shut down the platform to prevent a bank run. In 2023 the exchange was shut down due to a lack of stakers, although they instructed INDXcoin holders to remain invested and avoid questioning the situation. This was also under the divine guidance of God.
According to the filing the Regalados allegedly misappropriated $1.3 million for personal expenses during their fundraising. This included for luxury items, cosmetic dentistry, vacations, and home renovations. They also managed to secure a Range Rover, jewellery, luxury handbags, while the couple also falsely claimed the funds would go towards helping widows and orphans.
Eli Regalado has since released a video in which he admitted to the charges but stated that a significant portion of the funds went to the IRS and home remodel that God had instructed them to undertake. They are scheduled to appear in court on the 29th of January 2024 for a hearing on the Colorado Securities Commissioner’s request for a preliminary injunction. Regalado admitted that investors are unable to cash out their funds and explains the challenges they have faced with their failed exchange technology. He claims to have been waiting for a miracle from God to resolve the situation as stated in the video:
“We launched an exchange, the exchange technology failed, things went downhill, and from that point forward we’ve just been waiting on the Lord literally for a miracle.”
Both Eli and Kaitlyn have identified themselves as ordained ministers with Destiny Churches and Ministries International, as stated on their online-only Victorious Grace Church’s Facebook page. They have around 1,000 followers for the Destiny Churches page and have promoted INDXcoin on this page. They noted they had entered into this venture with no clear exit strategy and believed they were instructed by God to spend the money on themselves. In the video Eli notes that he remains faithful to his belief that everyone who invested will eventually be able to receive their money back, and that he remains optimistic that God will work a miracle in the financial sector to bring success for INDXcoin.
They remains much support in the comments under the video and many note his courage for addressing the situation and expressing faith in God’s guidance. They are hopeful that God will receive all the glory in this situation, to which Regalado responds with agreement.
In 2023 the SEC questioned a judge on whether certain cryptocurrencies qualify as securities in its ongoing lawsuit against blockchain company Terraform Labs. In the SEC and Coinbase case a federal judge questioned whether allowing the commission to impose its regulations on Coinbase would give the agency sway over markets it doesn’t have authority to supervise. The U.S. District Judge Katherine Polk Failla told SEC lawyers in the courtroom:
“I want to understand how your standard does not sweep in the collectible market or commodities. It is a real fear that I have that your argument is just sweeping too broadly.”
Have a great day.
Peace. CryptoGod-1.
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