A Colorado pastor of an online church is Michael Schmidtchallenging allegations that he and his wife defrauded parishioners out of millions dollars through the sale of cryptocurrency deemed "essentially worthless" by state securities regulators.

Colorado Securities Commissioner (CSC) Tung Chan filed civil fraud charges against Eligo and Kaitlyn Regalado last week in Denver District Court, according to a statement from the Colorado Department of Regulatory Agencies. The complaint accuses the Regalados of targeting members of the state's Christian community, enriching themselves by promoting a cryptocurrency token that the Denver couple launched called the INDXcoin.

The couple allegedly sold the "illiquid and practically worthless" tokens from June 2022 to April 2023 through a cryptocurrency exchange they created called Kingdom Wealth Exchange, Commissioner Chan said in the statement. The sales supported the couple's "lavish lifestyle," he alleged.

Kingdom Wealth Exchange, the only crypto exchange selling the INDX token was inexplicably shut down on November 1, according to the Denver Post.

"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," Chan said. 

Pastor says "God was going to provide"

In a nine-minute long video, Regalado acknowledged on Friday that the allegations that he made $1.3 million from investors "are true."

"We took God at His word and sold a cryptocurrency with no clear exit," Regalado said in the video, adding that he had also been divinely instructed to abandon his former business to take over INDXcoin. 

"I'm like, well, where's this liquidity going to come from,' and the Lord says, 'Trust Me,'" Regalado said in the video.

"We were just always under the impression that God was going to provide that the source was never-ending," he added.

Regalado did not immediately return CBS MoneyWatch's request for comment. 

According to the CSC, the Regalados had no prior experience operating a cryptocurrency exchange or creating a virtual token before minting INDX two years ago. Almost anyone can create a cryptocurrency token, the agency noted in its statement. 

There are more than 2 million cryptocurrencies in existence, in addition to 701 cryptocurrency exchanges where investors can trade them, according to crypto markets website CoinMarketCap.

Regalado said in the video that he will go to court to address the allegations against him and his wife. "God is not done with this project; God is not done with INDX coin," he said.

In:
• Colorado
• Fraud
• Cryptocurrency
• Bitcoin
• Securities and Exchange Commission

Elizabeth Napolitano

Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News' BizTech Unit and worked on The Associated Press' web scraping team.