Shima Capital Collapses and Enters Liquidation Following SEC Fraud Lawsuit

The crypto venture capital landscape has been rocked by the official collapse and liquidation of Shima Capital, a firm once emblematic of the 2021-2024 crypto boom. The downfall is a direct result of a devastating fraud lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against the firm and its founder, Yida Gao, in late November 2025.

The SEC's complaint alleges a sophisticated, multi-year scheme that defrauded investors of over $169 million. The core of the allegations centers on material misrepresentations made during the fundraising for "Shima Capital Fund I." Between 2021 and 2023, Gao allegedly used marketing pitch decks containing wildly inflated investment returns to lure 349 separate investors. Most notably, the SEC claims Gao boasted of a "90x return" on a prior investment when the actual return was a modest 2.8x. When discrepancies were uncovered by investigative journalists in 2025, Gao allegedly told his largest backers the errors were merely "clerical" in an attempt to prevent mass withdrawals.

A secondary scheme involved a Special Purpose Vehicle (SPV) created to purchase BitClout tokens. The SEC alleges Gao told investors he had unique access to buy these tokens at a 20-40% discount, promising to pass the savings on to protect the fund. Instead, the complaint details how Gao purchased the tokens at the discount personally and then resold them to the SPV at a markup, pocketing roughly $1.9 million in undisclosed profits—a "double-dipping" violation of the Investment Advisers Act.

The fallout has been immediate. Gao has resigned as managing partner, and the fund has notified its portfolio companies of its intent to dissolve. 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 are still pending. Parallel criminal investigations by the U.S. Attorney’s Office for the Northern District of California remain active.

The collapse sends shockwaves through Shima Capital's portfolio, which includes high-profile projects like the Layer 1 blockchain Berachain, the parallelized EVM layer Monad, and the NFT collection Pudgy Penguins. There are growing concerns about the secondary market impact as Shima's vested and unvested token allocations may be offloaded to cover legal costs and investor redemptions.

For the crypto industry, the Shima saga is a sobering reminder of the regulatory risks facing investment funds that lack robust internal compliance and transparency. It signals the SEC's clear intent to rigorously police the crypto venture capital space, likely leading to increased scrutiny and higher demands for transparency from investors across the sector.