Eli Regalado, a web-based pastor in Denver who made worldwide headlines when his supposedly God-inspired cryptocurrency failed, has been barred alongside along with his spouse from promoting crypto or different investments for the following 20 years.
The couple has additionally been ordered to repay $3.4 million.
“The defendants’ lack of information of the hurt they’ve prompted to their traders, coupled with their admitted need to proceed and broaden the INDXcoin scheme, leads the courtroom to conclude that (a ban on promoting) is acceptable,” Choose Heidi Kutcher wrote Friday.
The Regalados face 40 prison counts of theft, fraud and racketeering associated to the sale of INDXcoin, however Kutcher’s ruling got here in a civil case that the Colorado Division of Securities introduced towards the pair and their buddy Nathanael Enos, who additionally bought INDXcoin.
Enos, of Colorado Springs, additionally obtained a 20-year ban and should repay $19,600.
“On behalf of all INDXcoin holders, our heavenly Father, in whom we serve, will ship us,” Eli Regalado mentioned by electronic mail Monday, quoting from the Bible: “Now when Daniel knew that the doc was signed, he entered his home and he continued kneeling on his knees thrice a day, praying and giving thanks earlier than his God, as he had been doing beforehand.”
Eli, 45, and Kaitlyn Regalado, 32, are skilled entrepreneurs who created INDXcoin in 2021. They bought $3.4 million in cash and spent $1.3 million of that on private bills.
“The Regalados are Twenty first-century false prophets who leveraged the brand new and promising expertise of cryptocurrencies to run an old school rip-off, victimizing their very own congregants and others,” Tung Chan, the state’s securities commissioner, mentioned in a press release Monday.
“The courtroom’s holding is a win for Colorado traders, for justice and honest play, and for each professional cryptocurrency challenge on the market. We’re proud to be a part of this work,” Chan mentioned.
The central promise of INDXcoin was that its worth could be listed: Take the value of the 100 most precious cryptocurrencies, add them up, divide by 100 and you’d have the value of 1 INDXcoin. When Kingdom Wealth Trade, the net market the place INDXcoin was purchased and bought, opened, the listed worth was about $9, the Regalados have mentioned.
However INDXcoin didn’t have anyplace close to sufficient liquidity to rebuy at $9 the cash it had bought for $1 or $1.50. So, one unidentified dealer in Canada made a flurry of gross sales, drained the liquidity and compelled the change to shut in 2023. INDXcoin hasn’t been bought since.
“The defendants’ assertions of the ‘worth’ of INDXcoin had been deceptive in any respect factors of the providing; merely ascribing an algorithmic worth to a coin doesn’t make it value that,” Kutcher wrote final week. “The coin was by no means going to be value what the algorithm acknowledged.
“Relatively than coming clear, defendants then made a number of posts and communications to their traders, assuring them that the change would come again on-line and that every investor would be capable of promote their coin,” she added. “Defendants knew this was not true.”
Throughout a three-day civil trial in Might, the Regalados maintained that they might not have dedicated securities fraud as a result of INDXcoin isn’t a safety, and that fellow Christians purchased INDXcoin to affix in non secular fellowship, not as a monetary funding.
“Our entire focus on this trial is to point out how horrible and inconsistent and completely novice this (Division of Securities) investigation was,” Eli Regalado mentioned in his opening assertion.
“We didn’t defraud folks, we didn’t rip-off folks, we’re not predators, we’re not filled with greed,” Kaitlyn Regalado mentioned in her personal remarks. “Many individuals received saved by this challenge.”
However Kutcher decided that INDXcoin is a safety and its purchasers had been misled by Enos and the Regalados, who by no means instructed traders that they’d be spending a lot of the sale proceeds on themselves, thereby dooming the Kingdom Wealth Trade to insolvency.
“All through the proceedings, Mr. Regalado supplied this quote: ‘I’ll put the important thing of David on his shoulder. What he opens, nobody will shut,’” Kutcher recalled from the trial and the pastor’s use of a passage from Isaiah. “Mr. Regalado associated this quote to overcoming challenges.
“The quote appears apt, however for various causes. Right here, the Regalados used INDXcoin to open up a income stream after which closed that income to others once they closed Kingdom Wealth Trade, leaving lots of of individuals and not using a door to retrieve their funding.”
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