S Korea opens probe into 'Treasure ship' startup

South Korean financial regulators today said they have launched an investigation into a Seoul company which claims to have found a long-lost Russian "treasure ship" off the east coast.

Shinil Group announced last week it had found an imperial Russian naval cruiser the Dmitri Donskoi, which sank over a century ago in the Sea of Japan (East Sea), saying it was believed to contain gold bullion and coins worth USD 130 billion.

But the start-up firm since then has faced questions about whether the announcement was aimed at artificially boosting its share price, or luring investors into buying a virtual currency which it had recently started to issue.

The stock price of Jeil Steel, in which Shinil Group's founder has acquired a large share, skyrocketed by the daily limit of 30 per cent yesterday last week -- only to dive nearly 60 per cent the following week.

"We have launched a probe into Shinil Group," Financial Supervisory Service governor Yoon Suk-heun told lawmakers today.

"There is an investigation over share price manipulation and virtual currency," he said without elaborating.

Shinil reportedly sold virtual coins to investors, promising huge returns after salvaging the ship, which it said was at a depth of more than 1,400 feet (426 metres).

Critics noted that in 2003 another firm sparked an investor bubble by announcing the discovery of the Dmitri Donskoi, which was scuttled by her crew in a 1905 naval battle against Japan.

Others pointed out that Russia would have had no reason to load a vast treasure trove on a ship it was sending into battle, especially since it had a land route to its destination Vladivostok.

Shinil said it would hold a press conference tomorrow to reveal its plans for salvaging the ship and "clear many misunderstandings that recently emerged" about the company.