The pair were stopped in Guayaquil, one of the most violent cities in a country where claims of abuses committed by the security forces are on the rise.
Velasco, 34, was behind the wheel. According to a charge sheet against him, he refused to stop and drove over a soldier's foot at a roadblock. He says he hit a patrol car by accident.
"Then I heard an explosion, my cousin gripped me... I could see him changing color, turning pale," Velasco told AFP of the February 2 incident.
He claimed soldiers removed his cousin Javier Vega Ipanaque from the car, "beat him and stepped on his head."
The teen, who had no criminal record, died a day later from four gunshots that destroyed his lungs, stomach and spine.
Velasco said he, too, was roughed up by the troops, taking a bullet in the shoulder.
He is under house arrest for allegedly attacking the soldiers and resisting arrest.
The military issued a statement after the incident to say it had detained two "terrorists," but Ecuador's non-governmental Permanent Committee for the Defense of Human Rights (CDH) has taken up the case.
It is one of a growing number of investigations into alleged abuses by the military in the midst of a state of emergency in force since the escape from prison of a notorious gang leader in January.
Gangs fought back against the subsequent mobilization of troops, with riots in prisons and scores of people kidnapped and at least 10 killed in a series of brazen attacks.
- 'Complex to monitor' -
Laura Ipanaque told AFP she wants to clear the name of her son Javier, who she says was an innocent victim of the government's war on powerful cartels.
"No one is going to fill this void that has been left in me, this pain that I have," said the 41-year-old.
The judge in the case has ordered the prosecutor's office to investigate the soldiers involved.
CDH coordinator Fernando Bastias told AFP that "the disproportionate use of force... is very complex to monitor because it is happening almost everywhere."
He added: "We have seen people beaten, humiliated for disrespecting the curfew."
AFP has analyzed 18 videos circulating on social networks between January 11 and February 4 allegedly depicting security force violence in several provinces of the country.
Ten were verified to show abuses such as beatings in the streets.
Inside prisons, which had become the criminal headquarters of Ecuador's main gangs but are now under military control, there have also been reports of inmates being humiliated and tortured.
In a recent CDH-backed hearing in which 18 inmates sought to be granted access to medical care, several reported receiving electric shocks and other torments.
"They made me open my legs and gave me (a punch) in the testicles. They hit me with a cable in the back," one testified.
A judge ruled that violations had taken place and ordered reparations to the inmates.
AFP requested interviews with the defense ministry and the military. Both declined.
The armed forces, meanwhile, have been broadcasting videos of prisoners under a strict, new military regime, sweeping floors and doing other chores while proclaiming on camera to have improved living conditions.
Once considered a bastion of peace in Latin America, Ecuador has been plunged into crisis by the rapid spread of transnational cartels that use its ports to ship drugs to the United States and Europe.
The United Nations has urged Ecuador to adopt a "proportionate" response to the recent wave of gang violence.
President Daniel Noboa, 36, has defended his tough approach, insisting in a recent broadcast that "we are protecting the rights of the vast majority."
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