Just because Australia's government has its blockchain funding all figured out doesn't mean everything in the country's cryptosphere is hunky-dory. Well, at least not for the Australian online mattress retailer turned crypto fund manager, Stefanos Papanastasiou, who is being taken to court by former clients looking to get back more than 20 million Australian dollars (AU) (around $14.2 million) in losses.
According to the Australian daily newspaper The Age, Papanastasiou was the founder and managing director of OzMattress, which claimed to be Australia's first online bed retailer. But beyond mattresses, Papanastasiou was also acting as a crypto fund manager, telling clients in 2017 that he had spent AU$500,000 (around $355,000) developing a computer algorithm that could reduce the volatility of the cryptocurrency market and provide massive financial returns on bitcoin and Ethereum token trading.
While a handful of clients are set to launch civil actions against Papanastasiou, the first is property manager Savvas Alexiadis, who is suing Papanastasiou for AU$2.7 million (around $1.9 million) owed in investments made between July and November 2017. Alexiadis is claiming Papanastasiou instructed the property manager to transfer more than AU$2.1 million into a trading account managed by Papanastasiou, along with an unspecified number of bitcoins transferred into a wallet controlled by Papanastasiou.
Alexiadis also made a string of transfers to Papanastasiou's family and business. According to the report, Alexiadis transferred AU$40,000 (around $28,000) to Papanastasiou's wife, AU$35,000 (around $25,000) to his sister, and another AU$450,000 (around $319,000) to OzMattress' mattress supplier. Both the wife and sister are said to have not been aware of Papanastasiou's cryptocurrency business.
After receiving investments from Alexiadis and other clients, Papanastasiou allegedly cashed out and spent AU$5.44 million (around $3.8 million) on a luxury home in Melbourne, before ultimately defaulting on the settlement. Alexiadis claims Papanastasiou repeatedly refused to provide an account of trading activity and ignored requests to repay Alexiadis' investment.
Though not confirmed as a client bringing charges against Papanastasiou, Mark Thompson, a former coach of Australian football teams Essendon and Geelong, is said to have invested AU$1 million (around $709,000) in Papanastasiou's alleged scheme. Thompson has had his fair share of legal trouble, having been recently charged with drug trafficking after police raided his home in January 2018 and found 134 grams of ecstasy, 31.8 grams of methylamphetamine, 9.5 Xanax tablets, and one LSD tablet.
According to the report, Papanastasiou has not been tied to any involvement in Thompson's drug charges. However, the online-mattress-retailer-cum-crypto-fund-manager has claimed Alexiadis' investments have been repaid in excess of AU$2.7 million and that the truth behind the events is "far more sinister."