SEC Lawsuit Puts Shima Capital’s Future in Question After Wind-Down Email
The US Securities and Exchange Commission (SEC) has charged Shima Capital Management LLC and founder Yida Gao with investor fraud, alleging they made false and misleading statements to raise nearly $170 million for Shima Capital Fund I from 2021 to 2023. Gao is accused of exaggerating prior investment returns and misleading investors with inaccurate marketing materials. The SEC alleges that Gao claimed a 90x return on an investment that actually returned 2.8x, and, when discrepancies were about to be exposed, attributed them to clerical errors. Additionally, the SEC claims Gao secretly profited about $1.9 million by selling discounted BitClout tokens to investors through a special purpose vehicle while retaining the gains. Following the lawsuit, leaked screenshots of an internal email suggest Shima Capital will be wound down in an “orderly” manner, with FTI Consulting overseeing the process. Gao reportedly stated he would resign as managing director but remain available for portfolio support as allowed. Shima Capital, launched in 2021 with $200 million, had invested in various blockchain and crypto projects.
