- Shima Capital to shut down after founder Yida Gao settles fraud charges with SEC and DOJ.
- Gao accused of inflating pre-fund investment returns to raise $200M from investors.
- FTI Consulting takes over to liquidate assets, including stakes in Monad and Berachain.
Shima Capital, the $200M crypto venture firm that backed major protocols like Monad and Berachain, is officially shutting down. The collapse follows the indictment of founder Yida Gao, who reached agreements with the U.S. Securities and Exchange Commission (SEC) and Department of Justice (DOJ) over fraud allegations.
Why is Shima Capital Winding Down?
Gao conveyed the decision to dissolve the company to portfolio company founders via email, describing the situation as difficult.
Gao broke the news to portfolio founders privately, describing the situation as “difficult.” In his correspondence, he attempted to isolate the damage, claiming the decision to shut down stems solely from “actions relating to individual conduct.”
In the meantime, Gao has outlined plans for winding down the company, beginning with his stepping down as Managing Director. He noted that the fund will undertake an orderly wind-down and monetize investments as liquidity and market conditions allow.
According to Gao, the company will not execute forced sales, considering the nature of its closure. Meanwhile, he will remain active during the monetization process but not with management control.
The SEC Complaint: Fabricating a Track Record
The catalyst for the shutdown is a formal complaint filed by the SEC. The regulator alleges that Gao engaged in “misrepresentations” within Shima Capital’s marketing materials during its 2021 fundraising sprint.
Specifically, the complaint reveals that Gao inflated his historical investment returns (his pre-Shima track record) to make his performance look superior to reality. Regulators argue this deception was material to investors trusting him with $200 million in capital.
Meanwhile, Gao noted that crypto specialists from FTI Consulting and FTI Capital Management Limited will lead the wind-down process and serve as Shima Fund’s replacement registered investment adviser. In the meantime, data from Shima Capital’s website shows that the projects under the fund include Berachain, Monad, Pudgy Penguins, Sleepgotchi, Gunzilla, and many others.
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