As the legends go it supposedly sunk into the ocean. The only reasonable ideas I can think of this happening are a catastrophic seismic event enough to swallow a coastal/island city. Or a direct meteor impact on an island city that cratered the island beneath the seas. I imagine the later would create an extinction level event though. Edit: That or it was just some conquered city and a historic game of telephone resulted in the lore being that it sank into the ocean.