Late last week, Australian Federal Police arrested a man from Bulleen, a suburb of Melbourne, in their second phase of the investigation into a well-organized crime syndicate.
Following this, AUSTRAC, the Australian Transaction Reports and Analysis Centre, suspended two digital cryptocurrency exchanges associated with the arrested suspect.
The arrest on March 8 came amid a major investigation, one that the Australian Federal Police (AFP) has been running since October 2017.
In the initial announcement of the arrest, AFP did not disclose the suspect's name. But later he was identified by news outlets as 27-year-old Sam "Kazz" Karagiozis, the founder of crypto exchange Auscoin.
Karagiozis is also reportedly associated with MK Buy & Sell (also known as SK BTC), which has now been shut down by Australian law enforcement together with Auscoin.
Auscoin's Founder Allegedly a Key Member of Crime Syndicate
Karagiozis is already a familiar name in the Australian cryptocurrency scene. Not only he was a part of an ambiguous operation involving cryptocurrency ATMs, but he is also known for flashing the MR BTC Bentley he has in possession.
When the AFP arrested Karagiozis in his home on March 8, they found roughly 30 kilograms of drugs including ketamine, MDMA, methamphetamine and cocaine.
Subsequently to his arrest came the charges of possessing, importing and trafficking the drugs.
In the joint law enforcement press release, it was reported that in court, the Australian Police will allege that he had a key role in the criminal syndicate.
They believed he directed the operations within the organization and used Bitcoin accounts, dark web sites, as well as legitimate businesses to do the sourcing, the distribution and the payment of the illegal narcotics.
The County Court of Victoria obtained the orders to confine his $2 million valued property.
In his ownership, Karagiozis had multiple bank accounts, motor vehicles, cryptocurrencies, real estate properties, cash and a motorbike.
Auscoin's History & Allegations of Fraud
Auscoin has been subject to fraud allegations levied by customers in the past for delaying installation of the ATMs planned for 1,200 backers across Australia.
Its ICO in 2018 drew attention to the company after it raised only $2 million of the projected $30 million it planned to generate.
Despite all this, Auscoin reported it had generated a weekly turnaround of $500,000 AUD in 2018, while also revealing it had installed 31 ATMs in Australia.
An informational website, Auscon.io, has been set up by a critic of the company and its executives, including Karagiozis.
The homepage says the website will soon reveal evidence of the executives' "con" activities, which allegedly include market manipulation, brand theft, piracy, narcotics trafficking and other crimes.
The Shutdown of the Crypto Exchanges
Due to his arrest, the Australian police suspended the registrations of Karagiozis' two cryptocurrency exchange businesses.
Auscoin ATM and SK BTC were shut down because Karagiozis is a key member in both digital currency exchanges, the authorities say.
On March 7, right before the arrest, Karagiozis posted an announcement on his Facebook page which served as a goodbye message to a core team member, CVO Michael Sloggett.
Shortly after, Sloggett himself confirmed his resignation. None of the posts mentioned the arrest of Karagiozis.
Later that day, Sloggett broke the silence on Auscoin's Telegram account and confirmed Karagiozis' arrest.
He went on to say he was shocked by the situation and that he is not sure what to believe.
The Charges
Karagiozis was charged with 14 counts, none of them in direct relation to Auscoin.
The 27-year-old is facing four charges of trafficking drugs, 25 years, two charges of importing drugs, that carry life imprisonment, and four additional minor offenses related to drugs that carry a maximum of 10 years in jail.
Currently, Karagiozis is facing a possible overall sentence of two terms of life in prison if found guilty.
According to the Magistrates' Court of Victoria, his case hearing is scheduled for June 13, 2019 at 9:30 a.m.
