Police are widening their investigation into Shinil Group, which claimed to have found a sunken Russian warship carrying gold in an alleged attempt to attract capital.

The Seoul Metropolitan Police Agency’s Sophisticated Crime Investigation Unit took over the case involving the imperial Russian navy cruiser Dmitrii Donskoi which was scuttled by her crew in a 1905 battle with Japan.

What appeared to be a start-up business named Shinil announced in mid-July that it had discovered Donskoi off Ulleungdo in the East Sea, saying it was believed to contain gold bullion and coins worth 150 trillion won ($130 billion).

Stocks of Jeil Steel, in which Shinil Group’s founder has acquired a large share, jumped fivefold on the news, only to tumble a few days later.

Korea’s Financial Supervisory Service 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.”

Shinil Group is also suspected of attracting investment in its virtual currency named Shinil Gold Coin.

Another company that claimed to have found Donskoi before Shinil filed a complaint against the management of Shinil Group with the police.

Police have banned senior executives of Shinil Group from leaving Korea, and has requested an Interpol warrant for founder of the Singaporean Shinil Group surnamed Ryu.

Police suspect that the Singaporean Shinil group is a paper company set up by the Shinil Group in Korea. Media reports showed that the Singaporean Shinil Group’s listed address belongs to another firm.

“We have received reports of losses from across the country,” said an official at the Gangseo Police Station which had investigated the case so far.

“As the case requires a more focused investigation by the Seoul Metropolitan Police Agency, we have transferred all the material to the Sophisticated Crime Investigation Unit.”

By Kim So-hyun (sophie@heraldcorp.com)