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Mr Grayston said he took this photo of the house his
co-founder had built
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Crowdfunding website Kickstarter is investigating claims that money given to a tech project was instead used to build a home.
One co-founder of the Peachy Printer scheme accused the other of stealing more than 324,000 Canadian dollars ($353,000; £174,000) and spending it.
Efforts to make the device have been halted. A confession video has been posted to the site as proof.
But the alleged thief told the BBC it had been filmed "under duress".
The loss is said to have come to light in 2014, but there had been no mention of it in the dozens of development updates posted to Kickstarter until now.
Missing money
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The firm had marketed its tech as being the "world's
most affordable 3D printer"
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The company Rinnovated Design had promised to build the first 3D printer and scanner costing $100.
It raised 651,091 Canadian dollars for the scheme via Kickstarter and a further 74,167 Canadian dollars via another crowdfunding site, Indiegogo. Both platforms let start-ups seek donations from the public, and offer backers rewards that correspond to the value of the pledges.
Rinnovated Design was co-owned by Rylan Grayston, who headed up technical development, and David Boe, who took care of financial matters.
In a lengthy statement on the business's website, Mr Grayston said the funds raised by the campaigns were initially put in Mr Boe's personal account, from which he took 324,716.01 Canadian dollars.
Mr Grayston said that when Mr Boe "came clean" he agreed to repay the sum, and a decision was taken not to make this public.
"He claims to have spent the Kickstarter funds on materials for his house, but he hadn't gotten the construction far enough to get that value back out through his mortgage draws," wrote Mr Grayston.
"As stated in the repayment agreement, the plan was that as David reached each stage of his build, he would payout a percentage [of] the draw to Peachy Printer.
"David made good on the first payment, and defaulted on the final two.
"The last of these payments was on March 2nd 2015, after which I was unable to contact him for months. When I finally did speak to him, I found that he had gotten a lawyer and quite drastically changed his tone."
Mr Grayston said he notified police in October 2015 after failing to resolve the matter.
Confession clip
A video posted to YouTube - said to have been filmed in 2014 but only made live on 10 May 2016 - appears to show Mr Boe confessing to the alleged crime.
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Mr Boe - seen on the left - was questioned by his business
partner who filmed the interview
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"I made a mistake, I apologise and I am trying to make it right," he said.
"Everyone knows it's wrong and I'm not trying to deny it."
When the BBC spoke to Mr Boe he was not aware that Mr Grayston had released the footage and other documents.
Mr Boe confirmed he had appeared in the video, but declined to comment about whether he had actually taken money.
"That was taken under duress, extreme duress, at that date," he said.
"They actually told me exactly what they wanted said in that.
"I'm not going to talk about [the allegations] right now."
Kickstarter said the matter under was investigation.
"Anyone who abuses our system and the trust of our community exposes themselves to legal action," said its spokesman David Gallagher.
"We're reaching out to the law enforcement officials who are already looking into this case, and will assist however we can."
But the Canadian police indicated the case was at an early stage.
"The Saskatoon Police Service received a complaint in November 2015 regarding the theft of crowdsourced funds from a 3D printer company," said its director of public affairs Alyson Edwards.
"Since then detectives from our economic crime section have conducted some preliminary investigation, however they are still waiting for more information from the company's owners.
"Once they receive that information the crown prosecutor will be consulted to determine if this is a criminal case, or if it should proceed through civil litigation."
'Mind-boggling'
Mr Grayston could not be reached for comment.
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Funds for the Peachy Printer were also raised via the
Indiegogo service
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But on his project's Kickstarter page he acknowledged some of the details were "mind-boggling".
"I fully expect that some people will think this is just a big conspiracy, but if that were true do you really think I'd be asking you to write to my local police?
"After looking at all the evidence, if you still think this is a scam - I encourage you to report that to my city police."
Several of the project's backers posted sympathetic messages to the page, but others wrote that they had more questions, including why it took so long for the alleged theft to be announced.
Mr Grayston has said that Rinnovated Design is now "broke" after spending the rest of the money on development and wages.
However, he added that he still intends to "spin operations back up" at a later date.
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