Aju Business Daily

SEOUL -- Four people were jailed for up to five years for conspiring to deceive thousands of investors and bilking their money with false claims that a Russian Imperial Navy warship carrying gold was discovered near an island located between the Korean peninsula and Japan. The main culprit has been at large.

The four included three four executives of Shinil, a Seoul-based company which claimed to have found Dmitrii Donskoi, a Russian warship, lying on a seabed near Ulleung Island off the east coast. The company has lured investors by spreading unsubstantiated information that the ship sank with 200 tons of gold ingots and coins aboard in 1905 during a Russo-Japanse naval battle.

"Considering its method and scale, the crime is very heavy as it took a large amount of money from many unspecified victims," a district court in Seoul said in its ruling on Wednesday. The court characterized the case as a scam which was plotted systematically to make illegal profits.

A 52-year-old former Shinil vice chairman was sentenced to five years in prison and a man in charge of cryptocurrency operation received a four-year jail term. Rhu Sang-mi, who once served as Shinil CEO, was given a two-year jail term, while the fourth person was sentenced to 18 months in prison for his role in finding the ship.

Rhu Sang-mi is the sister of Rhu Seung-jin, identified as the main culprit behind the scam, who fled abroad last year when police launched an investigation. Shinil has issued its cryptocurrency, Shinil Gold Coin, to attract money from thousands of small investors into its alleged operation to retrieve gold from the sunken vessel.

The 2017 scam came at the height of a frenzy over digital money that subsided in 2018 when South Korea's virtual currency market crashed due to a crackdown that led to the arrests of some cryptocurrency exchange operators on charges of fraud and embezzlement. Warning of the "serious" side effects of excessive speculative investments, regulators have introduced a customer identification system to allow only real-name accounts used for deposits and withdrawals in cryptocurrency trading.