Scrutiny around crypto venture firm Shima Capital intensified after US regulators charged its founder with investor fraud.
Days later, an internal email surfaced indicating the firm could be moving toward an orderly wind-down.
Screenshots of a private email, shared publicly by a crypto journalist, appear to show a leadership shake-up and major operational changes just days after US authorities filed fraud charges.
The US Securities and Exchange Commission charged Shima Capital Management LLC and its founder Yida Gao on Nov. 25, alleging investor fraud tied to fundraising activities for the firm’s debut crypto venture fund.
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According to the SEC, Gao and Shima Capital raised nearly $170 million from investors between 2021 and 2023 using marketing materials that contained false and misleading claims about Gao’s past investment performance.
The complaint was filed in the US District Court for the Northern District of California and also references a parallel criminal action unsealed by federal prosecutors.
On Dec. 17, crypto journalist Kate Irwin shared screenshots that she said showed an internal email sent by Gao to portfolio founders.
In the message, Gao reportedly told founders he would step down as managing director of Shima Capital and that the fund would pursue an “orderly wind-down.”
The email claims the SEC and Department of Justice actions relate to Gao’s personal conduct, not the firm’s portfolio companies.
The screenshots also suggest that independent advisers from FTI Consulting and FTI Capital Management would oversee the wind-down and monetisation of investments, while Shima’s finance team remains in place.
Gao allegedly said he would continue supporting portfolio companies, but without management control. TheStreet Roundtable could not independently verify the email.
The SEC’s complaint details two core allegations.
First, regulators say Shima Capital’s pitch deck exaggerated Gao’s prior investment results. One investment was marketed as having generated a 90x return, when the SEC says the actual return was closer to 2.8x. The regulator also alleges Gao told investors the discrepancies were merely clerical errors when questions surfaced.
