SHINIL GROUP

DESCRIPTION OF EVENTS

"SHINIL GROUP is turning the dream of Salvaging the Donskoi Ship into reality."

"SHINIL GROUP will stand at the forefront of efforts to share its profits with the public, which are earned through exploration/salvage of the Donskoi, a sunken ship with treasure worth approximately KRW 150 trillion in Ulreungdo, as well as ancillary businesses such as documentary and film production, adding vitality to the local economy and creating jobs through direct employment."

"SHINIL GROUP's Donskoi International Exchange was launched to the news of the salvage of Korea's treasure ship to countries all over the world, including Russia, China, the United States, the U.K., Germany, France, Japan, Switzerland, Singapore, Hong Kong, Vietnam, the Philippines and the UAE, in an endeavor to promote the participation of the public, as well as a culture of sharing and donation."

"Shipwrecks have always been a source of fascination to people from all walks of life. From old sailors who bandy rumors of lost riches, to historians wondering what secrets their submerged hulls may be hiding."

"Shinil Marine said last week it had discovered the wreck of the Dmitrii Donskoi, a Russian armored cruiser sunk in 1905 after fighting Japanese warships off South Korea’s Ulleung Island, and that a staggering 150 trillion won ($130 billion) of gold was on board." "The ship is believed to be full of 5,500 boxes of gold bars and 200 tons of golden coins, with a total value of around $130 billion dollars." "But the company later backtracked on those claims and lowered the figure to $8.6 billion in a press conference on July 26."

"The 5,800-ton Dmitrii Donskoi was built in St. Petersburg and launched in 1883. The ship was badly damaged in the Battle of Tshushima in May 1905 before it was rumored to be scuttled by its captain off the coast of the South Korean island of Ulleungdo so the Japanese couldn’t capture the gold." "The cruiser was scuttled by its crew in 1905 after Japan's victory in the Battle of Tsushima - a key moment of the Russo-Japanese War." "Ever since, rumours have persisted that the ship was carrying 200 tonnes of gold for Russia's Pacific Fleet, to pay crew salaries and docking fees."

"Team members from the company posted a YouTube video on July 16th showing how they were able to allegedly find wreckage of the Dmitrii Donsoki, a Russian cruiser scuttled in 1905 after seeing combat in the Russo-Japanese War. The wreckage was found close to the island of Ulleungdo." "Company officials showed video footage from a submersible vessel, including several shots that appeared to show the name “Donskoi” on the side of a ship."

"Choe said submersible pilots had described several tightly lashed boxes within the ship that appeared to carry “meaningful items”. Citing unspecified Russian records, the company said those items “must be gold bars or coins”" "However, they did not show any images of gold and said they could not confirm the existence of any of the metal on board."

"Shipwrecks are history, but in the crypto world they are being championed as the future, and multiple advocates are pursuing ICOs that promise the rewards of sunken treasure to investors." "Shipwreck fever has never been higher, and so an ICO advancing a marine salvage operation sounds like an exciting, potentially profitable endeavor."

"Originally, the company said half of the purported gold would be sent back to Russia and 10% would go to help fund tourism on Ulleungdo." "But later, Shinil Group said they would be using the treasure to help launch an ICO. The ICO for ‘Shinil Gold Coin’ was scheduled to commence on July 30th and the actual token was set to be listed on different exchanges in August or September."

"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."

"Shinil Group said they would be using the treasure to help launch an ICO. The ICO for ‘Shinil Gold Coin’ was scheduled to commence on July 30th and the actual token was set to be listed on different exchanges in August or September."

"A website under Shinil Group’s name links the find to a “Donskoi International” cryptocurrency exchange that says it will hand out its virtual currency to anyone who signed up with the exchange." “The reports said the Donskoi held 200 tonnes of gold but that would only be 10 trillion won at current value,” said Shinil chief executive Choe Yong-seok. “We apologize to the public for the irresponsible citation.”

"Shinil Marine denied any connection with the cryptocurrency it said was run by a different company with the same name, and said it had changed its name. A phone number on the cryptocurrency exchange’s website led to the company until last week."

"According to the Korea Herald report, the investors poured their money into the so-called Shinil Gold Coin." "Initial reports indicated that Shinil Gold has attracted KRW60 billion ($53.7 million) in investments from an estimated 100,000 investors in South Korea since it was launched in 2017. However, the company’s CEO, Choi Yong-seok, already admitted that “there is no firm evidence that the ship contained anything of value.”" "[A] former business partner of former Shinil Group CEO Ryu Seong-jin told a magazine that some 200,000 people lost about 100 billion won in the Donskoi scam."

"However, a hard knock of reality hit an estimated 2,600 investors who South Korean police said have been duped of around KRW9 billion ($8 million) by the Shinil Group, which claimed to have discovered the ship." "A substantial number of investors in South Korea have reportedly lost well over $8 million."

"Police said the amount of losses could be bigger as their tentative estimate is based on the trading accounts they have tracked so far." “If we find more related accounts or confirm cases in which investors used cash, the amount could go up,” the Seoul Metropolitan Police Agency’s Sophisticated Crime Investigation Unit said.

"Stocks of Jeil Steel, in which Shinil Group’s founder had acquired a large stake, jumped fivefold on the news, only to crash a few days later." "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."

"The share price fell on Wednesday to a near two-month low. Jeil Steel said a week earlier it had “nothing to do with the treasure ship business”, but its stock rose as much as 19.2 percent on Thursday on investor speculation."

"A number of regulators, researchers, and industry authorities across South Korea have responded to Shinil Group’s claims with a strong dose of skepticism." "Experts have raised doubts that Russia would ever have put that much gold on a single vessel, when it could have carried the precious cargo more safely by rail to its eastern port of Vladivostok." "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."

"As reported several signs pointed to the ship being a scam as it was safer to deliver gold by road during the Russo-Japanese war instead of by a ship as claimed." "To casual observers it seems like human beings have been searching and recovering ships almost as long as they have been getting sunk, thanks in no small part to TV documentaries and blockbuster movies like Raising the Titanic. But in reality the process has so often been a painstaking and intensive one, with the risks involved in a recovery mission oftentimes outweighing the prospects of reward. The same can be said of shipwreck ICOs."

"Shinil Group said through a statement how they were the “only entity in the world” who have actually found the historical ship. This was disputed by a number of people." "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." "Their website featured photos of 2007 of the alleged wreck and location maps."

"Shinil Group said the discovery was a different shipwreck. However, the YouTube video posted earlier in the month by the company was not able to be seen as of press time since the uploader had closed their YouTube account. Additionally, South Korea’s Ministry of Maritime Affairs and Fisheries told BBC Korean that Shinil Group did not inform them about the wreck or apply for salvage rights."

"Even when a shipwreck is discovered anew, it’s possible there can still be a historic claim to it. Whether that claim is successful or not, it can kick off a potentially very expensive legal challenge, meaning any potential profitability a salvage group may have had upon finding a new ship may never materialize, and worse, ultimately leave them in debt from the expense of litigation." "South Korean media report that the Shinil Group based there was formed just before the ship find was announced, and was running on a very small capital base - not even enough to apply for salvage rights, which are 10% of a find's estimated value."

"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."

"Korea’s Financial Supervisory Service had issued a statement saying that investors’ discretion is recommended regarding the treasure ship salvage project as they can “suffer great losses if they rely on rumors.”"

"The Financial Supervisory Service (FSS) noted that shares of Jeil Steel, in which both current and former heads of Shinil bought stakes earlier this month, had seen increased trading and rising prices since May, an FSS official said."

"Shinil announced in the press briefing that Choi Yong-seok will replace Ryu as the CEO of Shinil Group." "Early last month, CEO of Shinil Group, Choi Yong-Seok faced a ban from leaving South Korea and his firm’s offices were raided by the Seoul Police." "Authorities are reportedly looking into Shinil Group for possible fraud charges." "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."

"South Korea’s financial watchdog said on Thursday it was investigating whether the company’s claims were part of any share price manipulation or other unlawful trade."

"Yu, who reportedly spearheaded the establishment of a cryptocurrency exchange called Donskoi International Exchange, allegedly promoted the supposed shipwreck on different social media platforms. According to his acquaintances, Yu, who was previously convicted of real estate fraud, has fled to Vietnam." "One of the sources the JoongAng Ilbo spoke to said the name Yu Ji-beom is one of several pseudonyms."

"Police received a court warrant on Friday to arrest Ryu on charges of fraud. Ryu, suspected of masterminding the treasure ship scam, is believed to be staying in Vietnam."

"This is the second arrest warrant issued against Ryu. The earlier warrant was for charges unrelated to the Donskoi case. Police are tracking down Ryu with the Vietnamese law enforcement authorities after seeking an Interpol warrant."

"[A] South Korean court ruled that Shinil’s claims of booty being aboard were bogus."

"The group’s vice chairman, only identified by his last name Kim, was sentenced to five years behind bars, while the Shinil’s former head, identified as Ryu, and another accomplice received two- and four-year sentences, according to Yonhap News Agency."

An elaborate cryptocurrency fraud claimed to have uncovered the Donskoi, a historic ship which had supposedly been lost off the coast of the island of Ulleungdo, complete with video footage of the supposed wreck. The company claimed significant gold was present on the ship, and proceeded to launch an ICO, with rewards supposedly backed by the discovered gold. In reality, the entire thing was a fraud and the team of 3 behind it were arrested for their fraud.

Korean Officials Probe Shipwreck ICO for Possible Fraud - CoinDesk (Mar 26)
2,600 investors sunk with South Korea's shipwreck ICO scam: report (May 6)
Russian ‘treasure ship’ scam caused losses to 2,600 investors: police (May 7)
Shipwreck firm ran crypto scam (May 7)
Shipwreck ICOs: Clear Sailing or a 'Load of Ship'? - Block Telegraph (May 7)
2,600 Investors Lost $8 Million in a Sunken Ship With Gold ICO Scam - Toshi Times (May 7)
Treasure ICO? Company Claiming Discovery of $133bn of Gold in Shipwreck is Launching a Cryptocurrency | Cryptoglobe (May 7)
Korean Authorities Looking into Possible ShipWreck ICO Scam ⋆ ZyCrypto (May 7)
https://www.ccn.com/korean-shipwreck-ico-under-investigation-for-possible-fraud/ (May 7)
SHINIL GROUP´s Donskoi International Exchange (May 7)
South Korean firm backtracks on $130 billion 'treasure ship' gold claims | Reuters (May 7)
SHINIL GROUP´s Donskoi International Exchange (May 7)
https://www.bbc.com/news/world-asia-45093892 (May 7)

More case studies

MyEtherWallet
Hola VPN Attack

WEX
Collapses