Recently, it was reported that the well-renowned Shinil group of South Korea had found wreckage of a Russian ship from the World War 1 era. It was claimed by the group that the wreckage contained gold worth billions. In the hindsight of all this, no actual evidence of gold was provided by the Shinil Group.
This Tuesday, the South Korean police decided to raid the office of the firm in the background of its possible intervention in a crypto scam. The claim made by the company of finding gold was regarded by the media as a scam in order to attract investors for buying local cryptocurrency launched by the firm, the Shinil Gold Coin. It was claimed by the company that it would reimburse its investors to the project with gold that was found alongside the wreckage of the ship.
According to a local news source, Korea Herald, the Seoul Metropolitan Police Agency sent a team of 27 white collar agents in order to search the offices of Shinil Group. The search was made in Shinil group’s office located in Yeouido western Seoul and seven other locations of the firm in order to extract and confiscate as much evidence as they could regarding the investigation.
The claim initially made by the company stated that it had found gold of worth $130 billion on the ship. The ship was reported to be from the World War 1 era that sank back in 1905 near South Korea. A video footage was also released by the company with the name “Donskoi” minted on it. As a result of this claim, investors were instantly attracted to invest in the firm’s local cryptocurrency the Shinil Gold Coin and because of this, an approximate investment of $54 million was found to be made.
Since no real evidence of gold was provided by the company, the claim was instantly rumoured as a scam. After the announcement of finding $130 billion worth of gold was made, the Chief Executive Officer of Shinil Group Choi Yong-Seok back-tracked on the claim initially made stating that:
The reports said the Donskoi held 200 tonnes of gold but that would only be 10 trillion won at current value. We apologize to the public for the irresponsible citation.
With the possibility of being a scam, a travel ban was imposed on the chief executive officer of Shinil group, Choi. The CEO was reported to be questioned by the authority regarding his possible involvement in the scam.
Regarding the scam, the involvement of the head of a Singapore-based affiliate of the Shinil Group, Yu Ji-beom was also reported. Yu was also accused by his own acquaintances for being involved in a real estate scam previously. He also had a major role to play in the establishment of Donskoi International Exchange and in spreading the news of gold being found by the firm. Yu was reported to be staying in Vietnam so that he could avoid the investigation being made regarding the scam.
Behind all this, it was also suggested that there might be a bigger game at play here. Financial Supervisory Service (FSS) noticed that both the current and previous heads of the Shinil Group had bought stakes in the shares of Jeil Steel. Ryu Sang-mi became the the second largest shareholder in the steel company, and the price of Jeil Steel rose up by 30% on July 17. But as soon as it was announced that Jeil is not linked to the Shinil group’s project in any way, its price dropped down. The heads of the Shinil Group who had stakes in the shares of Jeil Steel were rumoured to have gained major profit from this price fluctuation.
The major happening took place in this story when the South Korea Institute of Ocean Science and Technology and Dong Ah Construction Industrial, a government-led organization declared that the claims made by the group were not true. The institute suggested that the actual discovery of the Russian ship wreckage was found back in 2003. This spread the major news of this claim being a scam. Although later on, it was claimed by the group that the ship wreckage they found was different than the one found in 2003.
South Korea has been the center of cryptocurrencies from the start. It was also engulfed in the hacks on the crypto exchanges which shook the foundations of its crypto market. The need for a regulatory framework on the cryptocurrency exchanges in South Korea is growing stronger and stronger. This is just another example of a crypto-linked controversy damaging the market of cryptocurrencies in the country.
All in all, the claims made by the company attracted investors from all the direction boosting its own native cryptocurrency the Shinil Gold Coin. With this all being a possible scam, the South Korean police has started a crack down on the group and these raids are the very first steps in this regard.