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Screenshots of an internal email outlining plans to wind down Shima Capital have surfaced online, days after the US Securities and Exchange Commission sued the crypto venture firm and its founder over allegations of investor fraud.
On Nov. 25, the SEC charged Shima Capital Management LLC and its founder, Yida Gao, with making false and misleading statements while raising almost $170 million from investors, the agency announced on Dec. 3.
The complaint, filed in the US District Court for the Northern District of California, alleged that Gao inflated his investment track record in marketing materials used to raise capital for Shima Capital Fund I between 2021 and 2023.
According to the SEC, Gao claimed one prior investment had delivered a 90x return, when the actual return was closer to 2.8x. The regulator also alleged that when discrepancies in the pitch deck were about to be reported publicly, Gao told investors the issues were the result of clerical errors.
SEC alleges $1.9 million undisclosed gain
Separately, the SEC claimed that Gao raised about $11.9 million through a special purpose vehicle tied to BitClout tokens, telling investors that they would be protected by discounted token purchases. While Gao did acquire tokens at a discount, the SEC said he sold them to the SPV at a higher price without disclosing that he personally retained about $1.9 million in profits.
Related: Crypto fundraising sets new record of $3.5B in a single week
In a Wednesday post on X, crypto journalist Kate Irwin shared screenshots of an email allegedly sent by Gao to portfolio founders. In the screenshots, Gao purportedly said he would step down as managing director of Shima Capital and that the fund would undergo an “orderly wind-down.”
The screenshots purportedly show Gao stating that the SEC and Department of Justice actions are related to his personal conduct, not that of Shima Capital’s portfolio companies, and claiming that no fines have been imposed on the company.
The screenshots also show that independent advisers from FTI Consulting and FTI Capital Management would oversee the wind-down process and monetization of investments, while Shima’s finance team would remain in place. Gao allegedly said he would remain involved with portfolio support “as permitted,” but without management control.
Cointelegraph could not independently verify the email. We reached out to Shima Capital and some of the fund’s portfolio companies for confirmation, but had not received responses at the time of publication.
Related: A beginners guide on raising funds using cryptocurrencies
Shima Capital launched with $200 million debut fund
In 2022, Shima Capital announced the launch of its first venture fund, Shima Capital Fund I, raising $200 million to back early-stage blockchain startups. Founded in 2021 by Gao, the firm said the fund received backing from a range of prominent investors, including Dragonfly Capital, Animoca Brands, OKX Blockdream Capital, Republic and Andrew Yang.
Shima Capital has invested in numerous crypto projects, including Humanity Protocol, Berachain, Monad, Pudgy Penguins, Shiba Inu and many others.
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Two US Senators have introduced legislation aimed at cracking down on crypto fraud and scams by equipping law enforcement with better tools to spot attacks and identify perpetrators.
The Strengthening Agency Frameworks for Enforcement of Cryptocurrency (SAFE) Act, introduced by Democrat Elissa Slotkin and Republican Jerry Moran on Monday, seeks to coordinate action between the US Treasury, law enforcement, regulators and private sector players to tackle crypto fraud and scams.
“This task force, established by the SAFE Cryptocurrency Act, will allow us to draw upon every resource we have to combat fraud in digital assets,” Slotkin said, while Moran added:
“As cryptocurrency becomes more widely used, this legislation would help counter threats and make certain all Americans are better protected from crypto scams.”
The Federal Bureau of Investigation reported Americans lost $9.3 billion to crypto-related investment scams in 2024, marking a 66% increase from 2023. Individuals over 60 were the worst affected, accounting for losses of $2.84 billion.
It should be noted that the figure includes any investment scam that simply mentions crypto as part of its ploy. Many do not involve blockchain or cryptocurrencies.
Despite public and private efforts to raise awareness, crypto fraudsters and scammers have found more sophisticated ways to steal funds from investors.
However, Gabriel Shapiro, general counsel of crypto investment firm Delphi Labs, noted that a successful implementation of the SAFE Crypto Act could prompt crypto fraudsters and scammers into a state of panic .
“Scammers will probably end up shitting themselves if this goes hard,” Shapiro said in a post to X on Tuesday, noting that the attorney general, the director of the Financial Crimes Enforcement Network and the director of the United States Secret Service would be among the highest-ranking officials involved in pursuing crypto criminals.
Shapiro said the SAFE Crypto Act could be “very useful” as the US securities and commodity regulators currently aren’t as focused on enforcement action against hackers, scammers and Ponzi scheme operators.
TRM Labs among the private players to lend a hand
Blockchain forensic firm TRM Labs is among the private sector players ready to assist US officials, with its vice president and global head of policy, Ari Redbord, stating that a collaboration would help track and disrupt illicit networks in real-time:
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“By bringing industry and law enforcement together, we can meaningfully reduce criminals’ ability to exploit transformative technologies for harm.”
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Digital asset platform Exodus has partnered with MoonPay to launch a US dollar-backed stablecoin for everyday payments.
The Exodus Movement, which is also behind a popular crypto wallet, announced on Tuesday that its fully reserved dollar stablecoin is planned for launch in early 2026. The stablecoin will be issued and managed by MoonPay, a leading crypto payments platform and fiat on-ramp.
The stablecoin will be developed using M0, a stablecoin infrastructure platform that allows companies to build, issue and manage their own custom stablecoins.
The new stablecoin, which has not been named, aims to simplify digital dollar transactions for consumers without requiring crypto knowledge. It will integrate into Exodus Pay, allowing users to spend and send money while maintaining self-custody.
“Stablecoins are quickly becoming the simplest way for people to hold and move dollars onchain, but the experience still needs to meet the expectations set by today’s consumer apps,” said JP Richardson, co-founder and CEO of Exodus.
The stablecoin gold rush continues
MoonPay launched its enterprise stablecoin business in November to issue and manage digital dollars across multiple blockchains while integrating with M0’s open infrastructure.
“Enterprises want stablecoins that are programmable, interoperable and tailored to a specific product experience,” said Luca Prosperi, co-founder and CEO of M0.
Related: US banks could soon issue stablecoins under FDIC plan to implement GENIUS Act
Banks and crypto firms have rushed to offer their own stablecoins this year, spurred by the passage of the GENIUS Act in July, which introduced a clear federal regulatory framework for fiat-backed stablecoins in the United States.
The Trump family DeFi platform, World Liberty Financial, launched the USD1 stablecoin in March, global payments platform Stripe introduced stablecoin-based accounts to clients in over 100 countries in May, and Tether announced a regulatory-compliant stablecoin called USAT in September.
Two stablecoin players dominate the sector
The new Exodus and MoonPay stablecoin is entering a crowded market still dominated by two primary players.
Tether (USDT) remains the biggest stablecoin issuer with a market share of around 60% and a circulating supply of $186 billion, while Circle’s USDC is second with a 25% share and $78 billion market cap.
These two alone comprise 85% of the total stablecoin market capitalization, which is over $310 billion, according to CoinGecko.
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