The $200M Fund Dissolves
Shima Capital, a venture firm managing over $200 million in crypto assets, is winding down operations. The move follows a settlement with the U.S. Securities and Exchange Commission (SEC) involving founder Yida Gao, who was charged with misappropriating funds and fabricating his investment track record.
Gao resigned immediately. In a private note to portfolio founders first reported by Veda’s Kate Irwin, he cited “wrong decisions” and confirmed the fund would enter an orderly liquidation. The collapse leaves a roster of high-profile investments, including Berachain, Monad, and Pudgy Penguins, facing potential sell pressure as the firm monetizes assets to cover legal costs and investor redemptions.
The Receipt: 90x Returns Were Actually 2.8x
The SEC’s complaint (Litigation Release No. 26430) dismantles the pitch deck Gao used to raise $158 million from 349 investors in 2021. The regulator alleged two primary vectors of fraud:
- Track Record Inflation: Gao touted a past investment with a “90x return” to woo LPs. The actual return was 2.8x. When journalists probed the discrepancy earlier this year, Gao reportedly dismissed it as a “clerical error.”
- The BitClout Scheme: Gao used his personal capital to buy BitClout tokens at a heavy discount, then resold them to his own fund at a markup. He pocketed $1.9 million in risk-free profit without disclosing the conflict to investors.
“Gao engaged in a scheme to defraud investors… creating an undisclosed offshore entity to siphon assets.” — SEC Complaint
Market Impact
Gao consented to a $4 million settlement, including disgorgement and prejudgment interest, alongside a permanent bar from serving as an officer or director. While the penalty is financial, the structural damage is total. Shima Capital’s dissolution forces a fire sale of vested tokens and equity stakes in a market already sensitive to VC supply unlocks.
The firm has stated it will not execute “forced sales,” but the timeline for liquidation remains opaque. Portfolio projects must now navigate the reputational drag of a cap table comprised of a dissolved fraud vehicle.
