By CCN.com: As bitcoin entrepreneurs who founded the fast-growing Auscoin Bitcoin ATM business in Australia, there was nothing suspicious about Steen McBeth and Sam Karagiozis leading a flashy lifestyle including driving Lamborghinis and BMW motorcycles. Australian police, however, now allege that the duo’s cryptocurrency business was just a front for an international drug-dealing operation.
The two men are now in custody facing various charges all relating to drug-smuggling operations, according to the Daily Mail. According to the Australian police, the drugs were acquired on various darknet sites and then shipped to Australia. Their customers often paid in bitcoin, per the police.
The unraveling of the drug ring started after mail packages containing cocaine, ketamine and ecstasy were intercepted by Australian Border Force at Melbourne Airport in February 2017. After eight months, the packages were traced to McBeth and an associate named Jackson Li. They were arrested and charged with importing cocaine, crystal methamphetamine and ecstasy.
The police however only managed to link Karagiozis to the drug ring last month. He was subsequently arrested and charged with 14 offenses all tied to drug dealing.
McBeth and Karagiozis founded Australian Securities and Investments Commission (ASIC)-licensed Auscoin in late 2017. While the two were co-founders, Karagiozis became the face of the company in McBeth’s absence as the firm rolled out cryptocurrency ATMs across Australia.
In December 2017 Karagiozis had set a target of 1,200 ATMs across the country. The most recent update on the number of Bitcoin ATMs installed by the firm in Australia is 30.
Karagiozis was a Bitcoin bull but a bad trader. Early last year, after Bitcoin’s fall from its record high, he predicted it would hit $100,000 by 2018’s end.
Unfortunately, according to the Daily Mail, when the bitcoin bear market commenced, he lost nearly $3 million.
The bear market also hit the initial coin offering of Auscoin hard. The bitcoin ATM business had targeted to raise AUD$30 million but only managed to get close to AUD$2 million. Per Karagiozis the ATM business is doing well though.
In January this year, Karagiozis boasted that the turnover from the Bitcoin ATMs had reached a weekly figure of AUD$500,000. Karagiozis said this showed the potential of cryptocurrencies:
…our turnover is $500,000 a week, which is just insane considering how much the price of Bitcoin has dropped. It just shows there really is a market for it and cryptocurrency is seen as a way of the future for many.
In Greece, where his parents hailed from, Karagiozis was celebrated as evidence that ‘dedication, passion and hard work pays off’ according to Greek City Times. Various reports indicate that he dropped out of school at 15 to flip burgers at McDonald’s.
Besides the Bitcoin ATM business, Karagiozis also owned a bitcoin exchange business known as SK BTC and two Greek restaurants. He was also invested in real estate.
Police have now restrained most of his assets including bank accounts and a BMW motorcycle. McBeth also had his black Lamborghini, alongside other assets, restrained by the police.