The Crimson Ship was a ship full of Knahaten Flu-ridden Kothringi passengers from Black Marsh, bound for Hammerfell. Following the start of their expedition on the 9th of First Seed, 2E 563, they repeatedly attempted to stop at ports for a year, but were denied, in order to stop the spread of the flu. After this, the ship headed west out into the Abecean Sea, "never to be seen again."
However, after the passengers died from the flu, a group of pirates came to plunder the ship. After searching it they found the bodies of the dead Kothringi within a room, and were not heard of again.
In The Elder Scrolls Online, Kuralit will say how he used to be a member of the Bountiful Mara, before every other member of his crew but him saw this mysterious ship. As a result of the curse of this ship, they all disappeared later, leaving him alone.