, the trio fell about 400ft, which is 100ft above the safety limit for parasailing in Greece.
Mr Mallios was arrested by cops last night but was later released without charge.
The three teens had only arrived for a family holiday on the Greek island days before the accident.
'VERY IRRESPONSIBLE' Greek laws forbid three people parasailing at once - and the minimum legal age for taking part in the watersport is 16.
Rhodes' chief coastguard Spyros Tatis is heading the investigation.
A coastguard source told The Sun: "Nobody can believe why this guy decided to take them out in such bad weather.
"It was very windy and very irresponsible.”
The two relatives died while parasailing in Rhodes (stock image) Credit: Alamy Speaking to the Sun, Jessica's father described her as a "special, beautiful" daughter.
"They’ve been stolen from us and we’re devastated,” he said.
“One minute the sun was shining, we’re sitting at the beach waving them off, and the next it was chaos.
“Something’s gone wrong somewhere because I’ve been reading that you are only allowed two people in a parasailing trip at once, but yet three of them were allowed on there.
“Why did they allow that?"
One source said: "It was a horrific accident. Three of them were all up in the sky at an extremely high altitude, around 400 to 500ft, when the rope attached to their parachute and the speedboat snapped.
"It clearly wasn't strong enough to be pulling all three of them at the same time.
"Strong winds carried them across the sky and moments later they smashed into a cliff-face on the beach.
"All of them were parasailing at the same time but it is illegal for three to be doing it at once."
It was a horrific accident. Three of them were all up in the sky at an extremely high altitude, around 400 to 500ft, when the rope attached to their parachute and the speedboat snapped
A source The Greek coastguard confirmed two were found dead on the rocks near Cape Gina.
The other boy was rushed to hospital after being found nearby by firefighters, and was reportedly put into a medically-induced coma after suffering multiple injuries.
The family of the three youngsters are holidaying in the area of Pefki, according to Greek news website Ektaktanea.gr.
Gale force winds have also been blamed for the tragedy raising questions as to whether the young Brits should have been allowed to parasail in such stormy weather.
High winds had caused the group to drift towards the rocks, Greek media reported.
A Foreign, Commonwealth and Development Office spokesperson said: "We are supporting the family of two British people following their death in Rhodes, and are in contact with the Greek authorities."
A holidaymaker who saw the glider sprawled against rocks after the accident said: "Fire engines attended the scene but couldn’t actually get anywhere near the accident, due to the lack of roads round the mountainside."
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