A possible ICO scam is under investigation in South Korea after a much-publicized shipwreck attracted the suspicions of local authorities.
As reported by local outlet Korea Joongang Daily on August 1, 2018, Seoul-based Shinil Group is facing the heat as a critical figure in the scam. Earlier in July 2018, Shinil allegedly promised to pay investors in gold if they brought Shinil’s native digital token.
The group revealed on July 26 they had struck treasure off a sunken Russian warship in Korean waters, holding an estimated $130 billion worth of gold. The ship was said to have sunk 113 years ago and even released pictorial evidence to substantiate their claim.
However, the catch for investors to get their hands on the gold pile was to purchase a Shinil-branded cryptocurrency – which immediately raised red flags for police authorities. The coin has enjoyed moderate success in Korea and has reportedly raised over $53 million from over 100,000 investors since launch.
The Cryptocurrency Exchange Connection
The scam’s cryptocurrency connection comes in the form of a digital asset exchange established by Yu Ji-beom, head of a Singapore-based branch of Shinil Group.
Yu earlier incorporated the Donskoi International Exchange in Singapore and spread information about the sunken ship on social media. Interestingly, he was called out as a fraudster by acquaintances who informed Reuters about an earlier real estate scam Yu was an integral part of. Yu is currently in Vietnam to avoid investigations, as per reports.
Notably, the sunken ship stated “Donskoi” in bold font on all its posts, further inciting suspicious about its alleged Russian origin. The media advertising also asked investors to sign up for the exchange, in turn of free cryptocurrencies.
Marine experts and industry observers were quick to point out claims of a massive, mysterious treasure. Police forces additionally considered the activity as part of an elaborately designed stock manipulation act, evidenced by rising shares of Jeil Steel, which presumably provided metal for building the vessel.
Meanwhile, Shinil CEO Choi Yong-Seok played down allegations and called the development an “unverified media citing.” He added no hard evidence of sunken gold exists, despite earlier stating the ship contains “gold bars.”
Police have since imposed a travel ban on Yong-Seok and other board members of the Shinil Group.
Cover Photo by Steve Roe on Unsplash