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Yida Gao, Forbes 30 Under 30 Honoree, Struggling To Get Funds

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Yida Gao
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Yida Gao, a Forbes 30 under 30 qualifier with a successful crypto background, is facing financial and operational challenges because of alleged wrongdoings.

Gao completed his undergrad at MIT and returned to MIT in 2022 to teach an undergraduate course on crypto and finance. He has worked at multiple positions in the industry, including the start of his career at Morgan Stanley in June 2013 and worked until July 2015. He has invested in numerous start-ups with his business partner, Adam Struck.

Yida Gao

Yida Gao, Source: Fortune.com

Additionally, he worked at venture giant New Enterprise Associates before joining Struck’s venture firm Santa Monica as a full-time partner. The partnership of Gao and Struck gained popularity until 2019.

What Led to Gao’s Downfall?

In 2019,  Struck filed a lawsuit against Gao, stating that he secretly stole the firm’s confidential information and established a rival venture firm under the name Shima Capital, based in Puerto Rico.

Although Gao denied the claims and the legal dispute was settled in October last year, and the details of the settlement are unrevealed. He was also believed to have transferred Santa Monica’s assets to its privately owned firm. 

His subsequent actions, however, confirmed the existence of Shima Capital.

Gao raised over $200 Million from prominent finance industry tycoons, including Bill Ackman, and firms such as Dragonfly and Galaxy for its privately owned “Shima Capital.”

Further, without the knowledge of Ackman and other investors, a Fortune investigation found that he had secretly created another offshore entity and transferred all the assets to this unknown entity from his venture fund, which is illegal.

Transferring funds to an offshore entity without the knowledge of investors violated the Investment Advisers Act, as per the statement by Eric Hess, a lawyer focusing on venture capital and digital assets.

A representative from Shima Capital denied the above claims. He said that Gao has not been charged with any crime so far, and he added that Shima Capital does not comment on any of the regulatory matters like this.

Suspicious Activities

Reportedly transferred funds to a privately owned entity from venture capital funds.
Violated SEC investor protection rules.
Struggling to raise funds from the market.
Recently, the top employees resigned, including Carl Hua (Chief Technology Officer), Alexander Lin (Head of Research), and Hazel Chen (Head of Platform). However, the former executives did not comment on the reasons for their departure.
– Shima’s fall amid the ongoing bull run in the crypto market. 
The most recent report from the SEC reported assets under management (AUM) of $158 Million, lower than the raised capital of $200 Million.
Investors and prospective backers referred to Gao as a young and inexperienced entrepreneur who did not know who they were but rode the crypto wave.
Questionable accounting practices.
The investors reported that Gao is marking up Shima’s holdings based on his own estimates.
Lack of compliance.
His reported activities and operations were found to be wrongly acclaimed.
Misleading documents.
Conflicts of interest.

The above-listed activities have been highlighted in the past few years, painting a new image of Yade Gao. The accusations and allegations have affected the operations of his privately owned firm, Shima Capital. These actions will have a lasting impact on his image and are likely to severely impact his future in the industry.

The April 2024 SEC filing lists MHA Cayman as Shima’s auditors. An audit report dated May 2024 has not been released yet, and the auditor has refrained from making any comments. The firm’s stance will be clear after the release of the audit report.

Disclaimer

The analysis given above is for informational and educational purposes only. You should not take it as financial, investment, or other advice. Investing in or trading crypto assets is risky. Please consider your circumstances and risk profile before making any investment decisions.

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