cryptoknowmics.com
The future of Shima Capital, once a highly active player in the crypto venture capital space, is now in jeopardy following a major legal blow from the U.S. Securities and Exchange Commission (SEC). Leaked internal communications suggest the firm has initiated plans to wind down operations just days after the regulator filed fraud charges against the firm and its founder, Yida Gao. According to screenshots of an email allegedly sent by Gao to portfolio founders, he intends to step down as Managing Director while the fund undergoes an “orderly wind-down.” The move signals a dramatic fall for a venture firm that, as of early 2025, managed approximately $165 million in regulatory assets and was known for writing early-stage checks for hundreds of Web3 startups.
Allegations of Overstated Returns and "Clerical Errors"
The SEC’s complaint, filed in the Northern District of California, paints a picture of systemic misrepresentation. The agency alleges that between 2021 and 2023, Gao and Shima Capital raised over $158 million for their flagship fund by using a marketing pitch deck that significantly inflated Gao’s investment track record. In one specific instance, the SEC claims the deck touted a massive 90x return on a prior investment that had actually delivered a mere 2.8x return. When news reports began to surface regarding these discrepancies, Gao reportedly contacted his largest investors, falsely claiming the issues were simply the result of “clerical errors.” ---
The BitClout Scheme and Undisclosed Profits
[embed]https://twitter.com/kateirwin/status/2001065025977667613[/embed] Beyond the flagship fund, the SEC also highlighted a separate scheme involving a Special Purpose Vehicle (SPV) created to invest in BitClout tokens. Gao allegedly convinced investors he could secure tokens at a 20–40% discount, promising this would protect their capital. While Gao did obtain the tokens at a discount, the regulator alleges he resold them to the SPV at a higher price, pocketing approximately $1.9 million in undisclosed personal profit. Gao and Shima Capital have already consented to a bifurcated settlement, which includes a permanent injunction and nearly $4.2 million in disgorgement and interest. However, the reputational damage and the parallel criminal case unsealed by the U.S. Attorney’s Office appear to have made continued operations impossible, leading to the current liquidation process.