U-3523 appears to have ended up on the sea floor in much the same way as the British battleship HMS
Victoria with her bow buried in the mud and the stern sticking up vertically. In June 1893
Victoria was rammed in the Mediterranean off Tripoli, Lebanon by HMS
Camperdown, a similar battleship, and literally dove down to the bottom with the propellers still turning. The same thing must have happened to the German submarine. The bow was probably ruptured by a depth charge, filling the forward compartments with water and plowed right in.
https://en.wikipedia.org/wiki/HMS_Victoria_(1887)