A Back story for ya: A local sea cult - Seers of the Dark Sea - extracts a toll from the captains of ships that pass through the area. Those who do not pay a monthly tithe have all sorts of trouble ranging from dock accidents, loss of nets or fish and some have even been lost in sudden storms that seem to plague the bay. One well-known captain not only refused to pay tithes to the cult, but even went so far as to beat them off his boat when they came to collect. That night, when the ship slipped out of port, a great storm suddenly struck. Viewers from the shore saw the captain's ship visibly sucked up into a water spout and then hurled through the sky to be dashed on the rocks. No one even went to search for survivors or salvage, for the rocks sang with the cries of terrified sailors and in the half-light of a sky dancing with lightning, onlookers saw what seemed hundreds of strands of tentacles writhe and lurch about the ship until the screaming stopped late in the night. Some swear they saw the captain, lashed to the broken mizzenmast, have his flesh flayed by whatever the writhing shapes were. Since then, no one has dared to cross the cultist.
In truth, the Seers are a mix of pure-blood and half-blood malenti (evil sea elves forged by sahuagin). They are the eyes and ears of a mighty kraken - S'shoal'eth that lives in the area, and it is the cult and the kraken that are responsible for the bad things that have happened in the nearby sea. The kraken's goal is to gain control of all the nearby villages to bring it gold, treasure and sacrifices. It has sahaugin, malenti, various sea monstrosities and a few land-based servants to aid it, and a druidic high priest who has been turned into a were-octupus to speak for the Kraken.
The wrecked ship, ironically named The Defiance, is one of the cult's jumping-off points. It serves as a center to bring tribute and from the sea caves laced beneath the wreck, monsters are born and sent out to plague the ocean. While it'd be murderous to have characters face the kraken, you can have its half-glimpsed movements, a single tentacle attack, and/or a "sudden storm" brewing over the ship as the characters investigate foreshadow the kraken's involvement.