Plato was told of an island that sunk into the Atlantic Ocean by an Egyptian priest. Whether Plato decided to name it “Atlantis” or the priest spoke some Greek and named it that I have no idea. You may be correct the whole thing may be a fabrication, but on the other hand, the story could have some basis of a real event. There are many ancient sunken cities around the world.
But again, since the point of the story is good government vs bad government, why name it after a real place? It’s just not smart. It would be like Swift naming Gulliver went after real places. Just encourage people to miss the point.
Yes there are sunken cities around the world. And finding them and studying them is cool. But claiming any of them are Atlantis is just lying to gin up free press and money. They aren’t. None of them are.