Korean Authorities Investigate Alleged Crypto Scam That Promised Investors Shipwreck Gold

South Korean authorities are investigating a possible crypto investment scam involving the Seoul-based Shinil Group as the key figure, Korea JoongAng Daily reported July 31. Shinil Group (Shinil) allegedly promised to pay investors in gold from a sunken Russian shipwreck.

Earlier this month, Shinil announced it had found the Dmitrii Donskoi, a Russian armored cruiser that sank 113 years ago, according to Reuters. The company claimed that the ship was loaded with 150 trillion won ($131 billion) worth of gold.

To encourage investors to purchase the company’s own cryptocurrency, Shinil allegedly promised to reimburse them with the gold from the ship. The coin reportedly attracted 60 billion won ($53.7 million) in investments from around 100,000 investors since its launch this year, even though the company’s CEO Choi Yong-seok has admitted there is no clear evidence that the ship contained anything of value.

Seoul’s Gangseo District Police subsequently issued a travel ban on Choi and are reportedly planning to question him and other parties related to the investigation. As per Korea JoongAng Daily, the investment scam also involved Yu Ji-beom, head of a Singapore-based affiliate of Shinil Group.

Yu supposedly established crypto exchange Donskoi International Exchange and spread posts about the shipwreck on social media. According to his acquaintances, Yu has previously been convicted of real estate fraud and is currently in Vietnam to avoid the investigation.

Authorities are also investigating whether the suspects from Shinil group attempted to profit from fluctuations in the share prices of South Korean manufacturer Jeil Industries. Shares spiked by 30 percent on July 17 when former head of Shinil Group Ryu Sang-mi became the second largest shareholder in the Jeil Steel. When prices fell the next day, Jeil claimed that it was not related to Shinil’s ship salvage project.

Yesterday, Cointelegraph reported that Le Minh Tam, the CEO of Vietnamese cryptocurrency mining firm Sky Mining, disappeared with investor and company funds reportedly worth $35 million. Although he has not been found in person, Tam apologized for “everything” to investors in a Facebook post on Wednesday, explaining that the company’s profitability had fallen due to market volatility.