Insiders: Cryptocurrency venture capital firm Shima Capital is quietly winding down operations

According to insider Kate Irwin, cryptocurrency venture capital firm Shima Capital is quietly winding down its operations. Three weeks ago, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the firm and its founder Yida Gao, accusing them of "engaging in a fraudulent scheme" to deceive investors. An email sent to the founders of portfolio companies revealed that Yida Gao is stepping down and shutting down the fund, stating in the email, "I deeply regret my poor decisions and apologize for disappointing everyone."

Shima Capital was founded in 2021 with $200 million in funding and had invested in several crypto projects, including Berachain, Monad, and Pudgy Penguins. The SEC alleges that Gao exaggerated investment returns in promotional materials, claiming a return of 90 times on an investment, while the actual return was only 2.8 times. Additionally, Fortune magazine reported that Gao transferred investment funds to an offshore entity wholly owned by him, without disclosing this to investors.

The day after the SEC filed the lawsuit, Gao agreed to pay approximately $4 million in settlement.