When Yida Gao returned to MIT in 2022, the former varsity pole vaulter and Phi Beta Kappa honoree had big shoes to fill. The prestigious university had asked him to teach a graduate course at the business school on crypto and finance, a position recently vacated by Securities and Exchange Commission Chair Gary Gensler.
Just a decade removed from his time as an MIT undergrad, Gao was undaunted. The Chinese immigrant was riding high in the crypto world after landing on the Forbes 30 Under 30 list, and he had his own blockchain-focused venture firm, Shima Capital. In a short time, Gao raised $200 million from finance heavyweights like Bill Ackman and prominent crypto firms including Dragonfly and Galaxy, soon becoming one of the most active investors in crypto by participating in more than 300 deals.
Gao’s ascent was meteoric. But he also cut crucial corners. A Fortune investigation has discovered that unbeknownst to Ackman and his other investors, Gao created a secret offshore entity and funneled assets belonging to his venture fund into the corporation set up under his own name. “It’s directly contrary to what you’re permitted to do under the [Investment] Advisers Act,” said Eric Hess, a lawyer focused on digital assets and venture capital.
Gao has not yet been charged with any crime, and a representative for Shima Capital told Fortune that the firm does not comment on “regulatory matters such as this.” But his poor performance and behavior, which appears to violate SEC investor protection rules, left the onetime rising star of the crypto scene struggling to raise further capital, according to one source, who was granted anonymity to speak about confidential investment relationships. And despite a booming market, a Shima representative told Fortune that the firm is not currently fundraising.
Gao’s firm has also experienced an exodus of top employees in recent months, including chief technology officer Carl Hua and head of research Alexander Lin, who left to start their own venture firm early this year, as well as chief of staff and head of platform Hazel Chen. The departed executives did not respond to a request for comment.
Meanwhile, Shima appears to be floundering despite the current crypto bull market. Its most recent SEC filing lists assets under management of around $158 million—a figure less than the $200 million Shima raised in 2022, although the metric does not directly track a fund’s performance.
While corporate malfeasance may be as common in crypto as impounded Lamborghinis, Gao still managed to convince an elite lineup of investors to back him—and continues to be active in the space. His missteps are likely to provide fodder for the industry’s critics who have long decried its penchant for slippery behavior.
“In crypto, there’s a lot of softness around the edges, sometimes a lot of ‘Trust me, bro,’” said Hess. “We need to start paying attention to these standards and not pretending unless we’re just the derelict children of the financial system.”
The shell game
The latest in a series of crypto wunderkinds to burst on the scene, Gao cut a more traditional path—clean-shaven, toned, and touting an impressive resume of blue-chip institutions. He began his financial career at Morgan Stanley doing mergers and acquisitions. In his spare time, he invested in startups, often collaborating with a well-connected fellow entrepreneur named Adam Struck. Gao worked at the venture giant New Enterprise Associates and briefly enrolled at Stanford’s business school before dropping out to join Struck’s venture firm in Santa Monica full-time.
While the partnership between Gao and Struck seemed to be thriving in public, the relationship had turned acrimonious behind closed doors by 2019. Struck filed a lawsuit alleging Gao had secretly stolen proprietary information and set up a rival venture firm, Shima Capital, incorporated in Puerto Rico. Gao denied the claims, arguing that Struck had “belittled” his contributions and refused to acknowledge their 50/50 partnership, leading him to strike out on his own.
Struck did not respond to a request for comment about the legal dispute, which was settled in October 2023.
While the settlement remains under seal, Struck’s lawyers accuse Gao in the court filings of setting up a “shell game” of companies, including a British Virgin Islands entity called ShimaB, wholly owned by Gao.
Even as he sparred with Struck, Gao drew on his sparkling résumé and confident demeanor to persuade the top names in crypto and finance, including Bill Ackman and former presidential candidate Andrew Yang, to write him checks. According to a schedule of investments viewed by Fortune, Shima…
Read More: He taught at MIT, worked at Morgan Stanley, and convinced Bill Ackman and Galaxy