Korean Officials Probe Shipwreck ICO for Possible Fraud

Korean police are investigating a cryptocurrency startup claiming to be selling treasure from a sunken ship, the Korea Joongang Daily reported Tuesday.

Authorities are reportedly looking into Shinil Group, which claims to have found a Russian shipwreck from the early 1900s, for possible fraud charges. The company launched its own cryptocurrency, which investors bought with the promise of being able to redeem tokens for treasure from the ship, according to the report. As part of the investigation, officials have issued a travel ban on CEO Choi Yong-seok.

Seoul's Gangseo District Police are planning to interrogate Choi and others associated with the company as part of the alleged fraud case.

Shinil Group announced earlier this month that it had found the wreck of the Dmitrii Donskoi, a Russian Navy warship sunk in 1905, and that the ship might contain up to $134 billion worth of gold, as reported by Reuters. But the company later backtracked on those claims and lowered the figure to $8.6 billion in a press conference on July 26.

The company at the time announced that it intended to launch an ICO for its own token, named Shinil Gold Coin, which will be backed by the discovered ship's gold haul. The token has attracted 60 billion won in investments from around 100,000 people since it was launched this year, Korea Joongang Daily said, citing a source familiar with the matter.

According to a statement published on Shinil Group's website, the company has launched an exchange following the news of the salvage of Donskoi.

Shipwreck image via Shutterstock.