Busted Crypto Scam Promised Shipwreck Gold

According to the Korea Herald, South Korean police raided the office of a firm that allegedly ran a crypto scam that promised investors gold from a sunken Russian warship.

Shinil Group, with offices in Yeouido, western Seoul and seven other locations, had released footage, supposedly from a submarine. They claimed that the footage showed the wreckage of the Dmitrii Donskoi in the depths off Ulleung Island, east of the Korean peninsula. The Russian armored cruiser sank in 1905 during the Russo-Japanese war – and was supposedly loaded with 200 tons of gold worth 150 trillion won, or about $134 billion.

Shinil capitalized on circulating rumors of shipwrecked riches and used ‘gold fever’ to entice investors to invest in Shinil Gold Coin, the company’s own cryptocurrency. The purchase price was based on the rumored value of the sunken treasure.

But the shady business didn’t stop there. Shinil allegedly submitted an internal report to Korea’s maritime ministry to obtain excavation approval. In the report, the riches were estimated at just 1.2 billion won, or about $1 million.

At the same time, Shinil admitted in a press conference that their initial estimates were unverified. The firm adjusted their estimate downward to 10 trillion won, or around $9 billion. Shinil allegedly promised investors that the Shinil Gold Coin value would rise from its current price of 200 won to 10,000 won, or about $0.18 to about $9, and that this meteoric rise would occur by the end of September.

Since its launch, Shinil Gold Coin raised about 60 billion won (roughly $54 million) from around 10,000 investors.

On Tuesday, August 7th, 27 white collar crime investigators were reportedly sent by the Seoul Metropolitan Police Agency to gather evidence from the Shinil Group offices.

Shinil CEO Choi Yong-seok been banned from leaving South Korea as the investigation continues.

Police are also pursuing the head of the Shinil Group’s Singapore-based affiliate. Yu Ji-beom, who had previously been convicted of real estate fraud and has fled South Korea to Vietnam to escape police, allegedly created the crypto exchange Donskoi International, was responsible for spreading news about the Russian shipwreck on social media.

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