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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.

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South Korean Group to Launch ICO from Disputed Sunken Treasure Haul

As bizarre as it sounds a recently salvaged sunken treasure cache worth in excess of $130 billion is to be the basis of an initial coin offering from South Korean company Shinil Group.

According to Reuters the recently formed Shinil Group claims to have discovered the wreck of the Dmitrii Donskoi, a Russian armored cruiser built in the 1880s. The salvage rights are still being contested however the firm maintains that it is the “only entity in the world” to have discovered the ship which is reportedly holding a gold treasure cache valued at 150 trillion won.

Disputing the claim is the government managed Korea Institute of Ocean Science and Technology (KIOST), which told South Korean media that it discovered the wreck in 2003. Also claiming salvage rights is the now-bankrupt Don-Ah Construction Company which claims to have found the wreck in 2001. Further confusion has been added by the Vladivostok’s military history museum on the Pacific Fleet which claims under maritime law the vessel belongs to Russia.

The Shinil Group, comprised of a team of experts from South Korea, Britain, and Canada, plans to release footage of the discovery in a press release next week. Initial photos taken by submersibles confirmed the identity of the wreck which is believed to have gone down with 5,500 boxes of gold bars in addition to 200 tons of gold coins in its holds.

Local media has reported that the group intends on using the treasure to promote its own cryptocurrency, Shinil Gold Coin, using the haul as collateral. A newly launched website called “Donskoi International” crypto currency exchange has been linked to Shinil Group and the treasure.

The website claims it would share profits from the Russian haul by handing out its cryptocurrency to those who registered to use the exchange. It is currently conducting private sales and plans to launch the public ICO on July 30 with the aim of having coins listed on exchanges in August or September. The estimated price for one token is 10,000 KRW, or around $8.87.

The Financial Supervisory Services of South Korea warned against “overheated” investment last week with regulators stating;

“Investors need to be cautious as it’s possible they could suffer massive losses if they bank on rumors without concrete facts regarding the recovery of a treasure ship,”

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