Leaked memo shows popular crypto firm may wind down

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.

Second, the SEC alleges Gao raised about $11.9 million through a special purpose vehicle tied to BitClout tokens, claiming discounted token purchases would protect investors. While Gao did acquire tokens at a discount, the SEC says he sold them to the SPV at higher prices and kept roughly $1.9 million in undisclosed profits.

The agency said Gao has agreed to a proposed settlement that includes disgorgement and injunctive relief, subject to court approval.

In her posts, Irwin noted the situation contrasts with Gao’s past public statements.

She said Gao told Cointelegraph in a 2023 interview that Shima Capital was “working daily to maintain SEC compliance,” while Fortune later reported in 2024 that Gao had routed investments through an undisclosed offshore entity.

The leaked memo claims enforcement actions do not involve Shima Capital’s portfolio companies, which include several high-profile crypto projects. The email suggests investments remain intact and that founders should continue normal operations while the wind-down process unfolds.

Shima Capital launched its debut fund in 2022, announcing $200 million in commitments from prominent backers including Animoca Brands, Dragonfly Capital, Republic and others. The firm has invested across early-stage crypto and Web3 startups during the past market cycle.

TheStreet Roundtable reached out to the company for comment but did not receive a response by publication.

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This story was originally published by TheStreet on Dec 17, 2025, where it first appeared in the Bankruptcy News & Analysis section. Add TheStreet as a Preferred Source by clicking here.