In September 1869 it ran aground on a coral reef near Shadwan Island in the Red Sea. Expecting rescue, the passengers and crew stayed on board for some time, and were just beginning to enter the lifeboats when Carnatic broke in half. Thirty-one people drowned. The survivors made it to barren Shadwan, where they were rescued the next day by a passing ship, Sumatra.
Onboard Carnatic was £40,000 worth of gold (well in excess of £1,000,000 in modern terms), so the wreck was the subject of a salvage operation barely two weeks later. All the gold was reported recovered, but persistent rumours of remaining treasure has added to the romance of the ship.
These days Carnatic is a popular scuba-diving destination.