ICO Tied to Sunken Russian Treasure Leaves Korean Investors Nursing $8M Losses

The number of victims and the financial losses are an approximation as the police continue their investigation.

Some 2,600 South Korean investors have been robbed of about 9 billion won ($8 million) via an initial coin offering (ICO) launched by Shinil Group, which claimed to have found a sunken Russian ship loaded with gold, according to a report by the Korea Herald.

The police estimates are approximate as they are based only on the accounts tracked so far.

“If we find more related accounts or confirm cases in which investors used cash, the amount could go up. The number of victims could go down, however, if we exclude cases where the same person transferred money using different accounts,” the Sophisticated Crime Investigation Unit of the Seoul Metropolitan Police Agency told the news outlet.

Law enforcement agents are still looking for the alleged mastermind behind the scam, ex-Shinil Group CEO Ryu Seong-jin. He is reportedly hiding in Vietnam.

The Seoul Metropolitan Police launched an investigation into the scheme at the beginning of August. The probe was triggered by the announcement of Shinil Group that it had discovered Russian armored cruiser Dmitrii Donskoi, which sank in 1905 during the Russo-Japanese war. The vessel purportedly carried gold bullion and coins worth some $130 billion at today’s prices. Shinil Group claimed it had found the ship off the coast of the South Korean island of Ulleungdo and would attempt to retrieve the 5,500 boxes of gold bullion and 200 tons of gold coins presumably still in the ship’s hull. Half of the gold was going to be given back to Russia. However, Shinil Group did not provide evidence of the find, nor did the Russian authorities confirm that Dmitrii Donskoi carried gold when she sank.

Nevertheless, the Korean company launched an ICO - the Shinil Gold Coin - to fund the operation, promising would-be investors a cut of the gold. It reportedly raised around $50 million despite South Korean financial regulators warning against investing money in treasure hunting ventures.