Police travel ban on bosses who claimed wreck contained $193 billion in gold

A scale model of the Russian warship Dmitrii Donskoi is surrounded by the media before a news conference in Seoul, South Korea. Photo / AP

Police have placed a travel ban on executives of a South Korean company that claimed to have discovered a sunken Russian warship after suspicions were raised about the veracity of claims it was laden with £100 billion ($193b) in gold.

Investors clambered to sink funds into the Shinil Group last month after it announced the extraordinary discovery of the Dmitrii Donskoi's carcass, which it was claimed held a record haul of bullion and gold coins from the Russo-Japanese War.

But now police and prosecutors say they want to speak with Choi Yong Seok, the CEO of Shinil Group, and a number of senior members of the conglomerate.

They have fallen under a travel ban while an investigation is carried out over allegations in local media that the discovery was a "racket" to attract capital.

Police are also trying to locate Yu Ji Beom, the head of an affiliated group based in Singapore who set up a cryptocurrency called Donskoi International Exchange, named after the Russian warship, and promoted the search for the wreck.

The discovery of the Dmitrii Donskoi in July intrigued historians and investors around the world.

The shipwreck was at a depth of more than 425m about 1.5km off the South Korean island of Ulleungdo

Video released of the wreckage showed the extensive damage to the vessel caused in an encounter with Japanese warships in May 1905, along with cannons and deck guns encrusted with marine growth, the anchor and the ship's wheel.

But the announcement also came with reports that the Dmitrii Donskoi, which was scuttled before it could be captured by the Japanese during the Battle of Tsushima, was carrying the Russian fleet's funds and went down with 5500 boxes containing gold bars as well as a separate haul of 200 tonnes of gold coins. The Shinil Group estimated the gold would have a total value today of £101.3 billion.

Questions were later raised over the scale of the treasure that the company claimed was on board, although investors still flocked to purchase its cryptocurrency, known as Shinil Gold Coin. One estimate suggests that as many as 100,000 investors sank nearly £41 million into the company's cryptocurrency.

Officials admitted in a press conference in Seoul last week that there was no solid evidence that the ship was carrying anything of value when it sank. It lowered its total estimated value of the gold to £6.8 billion.

It is far from certain that the Dmitrii Donskoi would have—or could have— carried such a huge hoard of gold. https://t.co/cKY6zNZS1i

— Smithsonian Magazine (@SmithsonianMag) July 21, 2018

A parallel strand of the investigation is looking into alleged attempts to profit from a sudden rise in the share price of Jeil Steel. The firm's shares leapt 30 per cent the day the discovery of the wreck was announced because a former head of Shinil Group had become the second-largest shareholder in the steel firm. The price collapsed the following day after Jeil Steel said it was not involved in the recovery project.

The 1883 Dmitrii Donskoi was designed as a commerce raider and fitted with both a full set of sails and a coal-fired engine

Yu, who set up the Donskoi International Exchange crypto currency, has previously been convicted of real estate fraud, the JoongAng Daily reported, and is understood to be in Vietnam. Another source told the paper that Yu uses several false identities.

The newspaper reported that authorities were investigating allegations that the company encouraged investors to buy the cryptocurrency by claiming they would be reimbursed with gold recovered from the ship the Dmitrii Donskoi.

The Shinil Group, Choi and Mr Yu did not comment.