Shipwreck firm ran crypto scam

The Korean authorities are ratcheting up their investigation into Shinil Group, the company that claimed to have found a sunken Russian shipwreck, as key figures in the firm allegedly pulled off a cryptocurrency racket that promised to pay investors in sunken treasure.

Seoul’s Gangseo District Police issued a travel ban Monday on Choi Yong-seok, the CEO of Shinil Group, and others associated with the company for allegedly plotting to encourage investors to buy its own cryptocurrency by reimbursing them with gold from the ship, which Shinil estimated was worth around 150 trillion won ($131.8 billion). The police are expected to summon the head of the company and other related individuals.

Experts and some local media outlets raised doubts over the claim, and the CEO himself admitted that there is no firm evidence that the ship contained anything of value in a media briefing held last week.

Despite the lack of evidence, the group attracted tens of billions of won worth of investment by launching its own cryptocurrency, called Shinil Gold Coin.

In return for the investment, the group promised to pay investors with gold from the ship. This point prompted the Financial Supervisory Service to begin its probe into the company.

Behind the investment scam was Yu Ji-beom, head of an affiliated Shinil Group based in Singapore.

He spearheaded the establishment of a cryptocurrency exchange called Donskoi International Exchange and uploaded postings regarding the shipwreck on a blog and Instagram account.

Yu has previously been convicted of real estate fraud, according to his acquaintances.

They said that Yu is currently in Vietnam to avoid the investigation.

One of the sources the JoongAng Ilbo spoke to said the name Yu Ji-beom is one of several pseudonyms.

Another source said the coin attracted 60 billion won in investment from around 100,000 people after it launched this year.

The probe is also looking into whether the suspects at Shinil Group attempted to profit from the fluctuations in the share prices of Jeil Industries.

The price of Jeil Steel shares soared by a whopping 30 percent on July 17 because Ryu Sang-mi, the former head of Shinil Group, became the second-largest shareholder in the steel company.

But the prices plummeted the next day, as Jeil said that it is not related to Shinil’s salvage project.

Shinil announced in the press briefing that Choi Yong-seok will replace Ryu as the CEO of Shinil Group.

Shinil’s claims about the finding were disputed by the government-run Korea Institute of Ocean Science and Technology and Dong Ah Construction Industrial, which told the Korean media that it discovered the wreck in 2003.

Shinil argued that the earlier discovery was of a different wreck.

The Korea JoongAng Daily also confirmed in an earlier report that Shinil Group’s purported address at International Plaza in Singapore was not registered to the company, but was used by an unrelated consulting firm.

BY PARK EUN-JEE, KOH SUNG-PYO [park.eunjee@joongang.co.kr]