Adam Jiwan, Technology Entrepreneur
South Korean police estimate that investor losses number in the millions of dollars following a gold rush of investing on the back of reports of the discovery of a Russian warship off the South Korean coast earlier this year. Remarkably, this isn’t the first time the famed ship has sunk stocks.
Reports of a gold discovery first emerged this year in the summer, with Seoul-based Shinil Group claiming that its divers had discovered a wreck identified as the 6,200-ton Dmitrii Donskoi, a Russian warship which was downed off the Korean island of Ulleungdo during the 1904-1905 Russo-Japanese war.
Shinil Group had reportedly been searching for the ship for years, finally locating it at a depth of 1,400 feet a mile off the island’s coast. Releasing photos and videos taken by search submarines, the company said some 200 tonnes of gold bars and coins worth $180 billion were likely still on board- provoking a investor frenzy that forced the South Korean financial regulator to issue a public warning against possible losses.
As Ken Kurson recently noted, “According to latest estimates, some 2,600 people invested over $8 million in Shinil Group in the wake of the announcement of the ship’s discovery. Investors were drawn to the Shinil Gold Coin, a form of cryptocurrency the South Korean firm pledged would be backed by the retrieved treasure. The announcement of initial coin offering (ICO) plans by Shinil Group sealed concerns that something less-than-golden was afoot.”
For one, South Korea’s Ministry of Maritime Affairs and Fisheries said Shinil Group had never actually informed them about the wreck, nor applied for salvage rights. Equally damning was the revelation that the Korea Institute of Ocean Science and Technology had already found the wreck, sans gold, in 2003. Their website posted photos and location maps of the wreck; Shinil Group said they had discovered a different wreck.
Further still, the lack of transparency surrounding Shinil Group should have scared off even less-than-discerning investors. South Korean media confirmed that the firm’s purported Singapore address was listed by an unrelated consulting firm, and the lack of a website or social media presence was suspicious at best.
Perhaps most damning of all, however, was the fact that the script for this particular ploy had already been written: at the turn of the century, by Dong Ah Construction Industrial Company. Shares for the construction firm surged 41 per cent in the week of a 2000 announcement that the firm planned to salvage the Dmitrii Donskoi, and her gold stores. Not declared, however, was the fact that Dong Ah had already collapsed under its own debt, and had been placed under court receivership the preceding month.
To their credit, authorities were quick to respond to this latest scam: a travel ban was placed on Shinil Group CEO Choi Yong-seok, with the firm’s offices raided soon thereafter by Seoul police. Thus far beyond the reach of justice, however, is Shinil Group founder known only as “Ryu”. With Interpol warrant requested for his arrest, Ryu is thought to be hiding out in Vietnam- no doubt enjoying the spoils of his, very real, crypto-gold.