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South Korea: Police Raid Firm Whose Alleged Crypto Scam Promised Investors Shipwreck Gold

South Korean police have raided the office of a local firm whose alleged crypto scam promised investors the spoils of a sunken Russian warship, The Korea Herald reported August 7.

The Seoul Metropolitan Police Agency reportedly sent 27 investigators from its white collar unit to to collect evidence from the premises of Shinil Group in Yeouido, western Seoul, and seven other locations on Tuesday.

In mid-July, Shinil had released submarine footage of what it claimed was the wreckage of the Dmitrii Donskoi, an armored Russian cruiser that sank in 1905 in the midst of the Russo-Japanese war, alleging it had been found beneath the waters off Ulleung Island, east of the Korean peninsula, The Korea Herald writes.

Meanwhile, Shinil’s Singapore-based affiliate is said to have enticed investors to purchase the firm’s own cryptocurrency, Shinil Gold Coin, based on the rumored value of the shipwreck. The company allegedly exploited circulating claims that the ship had gone down with 200 tons of gold worth 150 trillion won (around $134 billion).

At a subsequent press conference, Shinil admitted the reports were unverified, adjusting the figure to 10 trillion won (around $9 billion). At the same time, the firm is alleged to have submitted an internal document to the maritime ministry for excavation approval that estimated the spoils at just 1.2 billion won (around $1 million), The Korea Herald writes.

The firm allegedly further promised investors that the value of the Shinil Gold Coin would skyrocket from its current 200 to 10,000 won (around $0.18 to around $9) by the end of September.

According to a local news report August 1, Shinil Gold Coin has raised 60 billion won (around $54 million) in investments from around 100,000 investors since its launch. Shinil CEO Choi Yong-seok been banned from leaving the country as the investigation continues.

Authorities are also pursuing the head of the firm’s Singapore-based affiliate, Yu Ji-beom, who allegedly created a crypto exchange dubbed Donskoi International and spread posts about the shipwreck on social media. According to his acquaintances, Yu has previously been convicted of real estate fraud and has fled to Vietnam to elude the investigation.

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