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Authorities in South Korea are conducting investigations into an alleged cryptocurrency investment scam that promised to reimburse investors with shipwreck gold.
Shinil Group, a Seoul based firm, reportedly encouraged investors to buy its native cryptocurrency in exchange for gold from a sunken Russian warship, according to Korea JoongAng Daily.
In July, Shinil made the announcement that it had found a Russian cruiser, Dmitrii Donskoi, which was shipwrecked 113 years ago. It made claims that the ship was loaded with $131 billion worth of gold.
So as to encourage investors to buy into their project’s crypto coin, the team behind Shinil reportedly promised gold from the ship as reimbursement. As a result, it allegedly attracted more than 100,000 investors who poured in $53.7 million into the project.
“Irresponsible Citation”
The company’s CEO Choi Yong-seok has since backtracked on the claims and apologized for citing an unverified report.
“The reports said the Donskoi held 200 tonnes of gold but that would only be 10 trillion won at current value. We apologize to the public for the irresponsible citation,” he said, according to Reuters.
Subsequently, police have placed a travel ban on Choi and are planning to conduct investigations on him as well as other involved in the scam.
The cryptocurrency investment scam allegedly involved the head of a Shinil Affiliate based in Singapore, Yu Ji-beom.
Yu was reportedly behind the establishment of Donskoi International Exchange, a crypto exchange platform. He also spread social media posts concerning the shipwreck.
Reports say that Yu had in the past been involved in a real estate fraud and that in order to avoid the investigation, is currently in Vietnam.
Financial authorities in the country are also investigating a link between Shinil’s claims and share price manipulation in Jeil Steel. Shinil heads bought stakes in the company in July and after the shipwreck gold claims, share values skyrocketed by 139%.