The future of Shima Capital, a venture capital firm heavily invested in crypto and emerging technologies, is uncertain after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the firm and its founder, Yida Gao. The SEC's complaint, submitted to the California Northern District Court on November 25, 2025, alleges that Gao orchestrated a scheme to defraud investors. Following the lawsuit, internal communications suggest that Shima Capital is initiating a wind-down process.
The SEC's complaint accuses Gao of making "material misrepresentations" to investors and engaging in a scheme to defraud them. Specifically, from May 2021 through March 2023, Gao allegedly raised significant capital by offering membership interests in "Shima Capital Fund I," a crypto-asset-focused venture fund. The SEC alleges that Gao used a misleading "pitch deck" containing false information about his investment track record to attract investors. He purportedly claimed a 90x return on a prior investment when the actual return was only 2.8x. Through this pitch deck, Gao raised over $158 million from 349 investors for Shima Capital Fund I.
Adding to the allegations, the SEC claims Gao established a Special Purpose Vehicle (SPV) to acquire BitClout tokens, promising investors unique access to discounted tokens. Instead, Gao allegedly purchased the tokens at a discount personally and resold them to the SPV at a markup, pocketing approximately $1.9 million in undisclosed profits. The SEC views this "double-dipping" as a violation of the Investment Advisers Act. Furthermore, a Fortune report stated that Gao transferred investment funds to an offshore entity he fully owned without disclosing this information to investors. The SEC alleges that Gao secretly moved $42 million in investor funds to MHA Cayman, an offshore entity, without informing investors.
In February 2023, when a news publication began investigating discrepancies in Shima Capital Fund I's pitch deck, Gao allegedly misrepresented the issues as "clerical errors" to major investors.
The fallout from the SEC lawsuit has been swift. Gao has reportedly resigned from his position. An email allegedly sent to portfolio founders indicates that Shima Capital is moving towards dissolution. The firm's external activities have been effectively suspended since the SEC suit.
Yida Gao has reportedly consented to a "bifurcated settlement," agreeing to pay over $4.2 million in disgorgement and interest and accepting a permanent injunction from future securities violations. However, the civil penalty amount and a potential permanent officer-and-director bar remain unresolved. Parallel criminal investigations by the U.S. Attorney's Office for the Northern District of California are ongoing.
Founded in 2021, Shima Capital managed $200 million and invested in crypto projects like Berachain, Monad, and Pudgy Penguins. The firm's alleged misconduct raises questions about transparency and trust in the crypto venture capital landscape. As the liquidation process begins, concerns are growing about the potential impact on the secondary market as Shima's token allocations may be sold to cover legal costs and investor redemptions. This situation could further destabilize a market already affected by high-leverage liquidation events and macroeconomic uncertainty.
