Sunken Treasure … And Sunken ICO Dreams

Volatility comes in waves when it comes to cryptos.

But waves of another kind — the kind that come complete with ships, treasure and no small hint of intrigue — have dominated headlines this week.

In South Korea, an investigation is underway, targeting a cryptocurrency startup that raked in tens of millions of dollars — a bounty that pales in comparison to the $130 billion it says it has discovered in Russian gold lost amid the waves and resting on the ocean floor.

Where billions are at stake, where millions have been raised on the promise of riches and where cryptos are involved, it all smacks of a thriller.

Or possibly a vale of tears, as investigators in South Korea are investigating whether this all is a scam. A novel scam, at that.

The basics of the story? The company in the crosshairs is Shinil Group, which is billed as a treasure-hunting company. The company floated an ICO on the heels of announcing it had discovered a sunken Russian battleship with the aforementioned gold. YouTube videos (what else?) made the rounds mid-month showing the wreckage of the ship, which went down in the Russo-Japanese War of 1905. Payload and paydirt: Shinil has said that there are believed to be 5,500 boxes of gold amid the wreckage, and 200 tons of gold coins.

And amid the find? Well, an ICO, of course. Shinil stated that it would use the treasure to launch an ICO backed by the gold. That ICO had been planned for month’s end, which has come and gone, and the token had been slated to list on varying exchanges through September. Enthusiasm abounds, one would think, in the third largest crypto market in the world, and where investors poured millions into the crypto known as the Shinil Gold Coin.

What doesn’t pass the smell test, and what might sink the story: as CCN notes, the company has said that it is the sole entity across the globe to have found the ship. That claim is contested, in one case by no less than the Korea Institute of Ocean Science and Technology, which said it found the ship about 15 years ago.

The YouTube account that hosted the Shinil video? It’s been closed. The company did not tell the government about the wreck or apply to the government for salvage rights. Oh, and the address listed online for the company actually belongs to a different firm, one unrelated to Shinil and one unrelated to the Seoul firm. An arrest warrant has been issued for the founder of that Singaporean firm.

The Financial Times reports that in South Korea, Choi Yong-seok, who serves as CEO of the firm at the center of the shipwreck controversy (the South Korean Shinil), is being kept by authorities from leaving the country. That detainment comes as the FT notes that Choi may also have been involved in manipulating stock prices of Jeil Steel, where he had bought a significant stake, and where, as the financial publication noted, investors were sanguine over prospects tied to a possible salvage mission.

As for the gold itself … Choi has said there is no evidence. “The substance of the case is not gold but historical documents,” he said, according to the Financial Times.

The ship may have sailed for this one. But in the case of Shinil and the gold coin, and the ship that was discovered anew, but wasn’t new, we have a textbook example of a number of cautions when it comes to the brave new world of ICOs. The Internet is a wild west of information and disinformation. History has romance in it, and occasionally truth, but possibly not here.

It would be trite to say that all that glitters is not gold, but how about: all cryptos that trace to sunken treasure? For investors, call them a case of sunken costs.