Yida Gao, Shima Capital
Yida Gao, Shima Capital

Chinese Investor Yida Gao of Shima Capital Defrauded U.S. Venture Capitalist

Yida Gao, who taught at MIT, is the founder and CEO of venture capital firm Shima Capital, which has been accused of financial fraud in a lawsuit filed by Adam Struck, the founder of Struck Capital.
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According to a recent Fortune article by Leo Schwartz, Yida Gao, a young crypto venture capitalist, raised $200 million for his firm Shima Capital from prominent investors like Bill Ackman.

However, he secretly funneled assets into a personal offshore entity called ShimaB, violating SEC rules. Gao struggled with unorthodox accounting practices, leading to investor concerns and employee departures.

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Chinese Investor Yida Gao of Shima Capital Defrauded U.S. Venture Capitalist 4

Despite these issues, Gao remains active in the crypto space, serving as a cautionary tale for the industry.

A Fortune reporter confirmed that they used this article to find out more details about Gao but could not reference certain allegations put forth by Adam Struck, as Gao disputed them.

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Chinese Investor Yida Gao of Shima Capital Defrauded U.S. Venture Capitalist 5

I came across this when reporting the story! I tried to mostly stay clear from allegations from the lawsuit just because he disputed much of it, but interesting stuff was written to me by Leo in my email.

A lawsuit filed in U.S. District Court in Los Angeles alleges that Yida Gao, a 33-year-old MIT graduate and former employee of Adam Struck’s venture capital firm Struck Capital Management, engaged in fraud and theft of proprietary materials.

Adam Struck, a prominent venture capitalist investing in cutting-edge technologies, claims Gao’s actions put him at the center of the technological rivalry between the United States and China.

According to the complaint, Gao was hired to assist with Struck’s blockchain fund but was later fired due to alleged misconduct. The lawsuit accuses Yida Gao of stealing company secrets to establish a competing firm and attempting to embezzle $150,000. Following his termination, Gao joined Aurora Technology Acquisition Corp., a Special Purpose Acquisition Company (SPAC) with alleged ties to the Chinese government and Communist Party.

We allege that during his time as a minority partner at DDC [a unit of Struck Capital], Mr. Gao repeatedly violated his fiduciary duties, used Mr. Struck’s name to make unauthorized deals, attempted to embezzle funds and, upon his termination, stole proprietary information to start his own, competing fund, Shima Capital,” said attorney Amnon Siegel of Miller Barondess, Struck’s counsel in the lawsuit.

Experts suggest that China may leverage hot investment sectors and vehicles like SPACs to gain access to sensitive U.S. technologies, raising national security concerns.

Nicholas Eftimiades, a retired Senior Intelligence Officer, states that the U.S. government lacks the structure to counter Chinese espionage efforts effectively. At the same time, industries are vulnerable due to insufficient expertise and resources.

Professor Shaomin Li of Old Dominion University notes that China uses front corporations and acquisitions to obtain intellectual property from American firms. He asserts that the Chinese Communist Party blurs the line between state-sponsored espionage and private intellectual property rights violations, utilizing ordinary citizens to gather intelligence for the state.

The lawsuit also alleged Gao’s involvement in a scheme to sell personal protective equipment (PPE) at inflated prices during the COVID-19 pandemic. Records indicate Gao’s association with PPE procurement entities and bids for municipal contracts worth over $1.2 million. Furthermore, the complaint highlights Aurora Technology Acquisition Corp.’s alleged Chinese connections, as Gao serves as CFO.

Several Aurora executives, including Chairman and CEO Zachary Wang and COO Cathryn Chen, have purported links to Chinese government entities and influential figures.

As concerns grow over China’s efforts to appropriate innovative technologies from U.S. firms, Professor Li cites FBI Director Christopher Wray’s statement that new probes into China are launched every 12 hours.

The Chinese military allegedly orchestrated a cyberattack on Equifax in 2017, compromising the sensitive personal information of approximately 150 million Americans, who account for nearly half of the U.S. population and a significant portion of the adult population. This incident is not isolated, as China has been implicated in numerous attempts to undermine U.S. security.

The consequences of such data breaches extend beyond privacy concerns, posing significant risks to American citizens’ health, livelihoods, and overall security. The FBI is investigating around 5,000 active counterintelligence cases, nearly half of which are related to China. At present, the Chinese government is suspected of attempting to infiltrate and compromise crucial American institutions, including healthcare organizations, pharmaceutical companies, and academic institutions involved in COVID-19 research.

It is essential to distinguish between the actions of the Chinese government and the Chinese Communist Party and those of the Chinese people, particularly Chinese Americans. The United States welcomes over 100,000 Chinese students and researchers annually, acknowledging the valuable contributions made by individuals who have sought liberty and a better life in America for generations. The focus of concern lies squarely on the activities of the Chinese government and the Chinese Communist Party, not on the Chinese people as a whole.

In conclusion, the lawsuit against Chinese investor Yida Gao and his firm Shima Capital highlights the growing concerns over China’s alleged theft of U.S. intellectual property and technology. As the FBI intensifies its efforts to counter Chinese espionage, this case underscores the high stakes in the ongoing U.S.-China technological rivalry. The outcome may have significant implications for the future of bilateral relations and the protection of American innovation.

Avatar of Lauren Casper

Lauren Casper

Lauren Casper is a best-selling author and activist who exposes fraudulent businesses through in-depth investigations. When not fighting scams and reviewing, she enjoys being a wife, mom, and amateur baker.

3 Comments

  1. Lauren,

    is this a new lawsuit? I am aware of one filed in Feb 2023 and dismissed in November 2023. Is Struck suing Shima Capital again?

    thank you very much.

    • Boris,

      The lawsuit you are referring to was settled between Yida Gao and Adam Struck. Recently, a Fortune reporter highlighted this case, suggesting it may involve a whistleblower.

      Thank you.

  2. According to PAnews, China, The Shima Capital founder is suspected of embezzlement, and several executives have resigned.

    According to Fortune magazine, an investigation found that Shima Capital founder Yida Gao created a secret offshore entity and transferred assets belonging to his venture capital company to a company registered in his name without the knowledge of other investors in the company. Attorney Eric Hess said this was a complete violation of the behavior allowed by the Investment Advisers Act.

    Yida Gao has not been charged with any crime, and a representative for Shima Capital said the firm does not comment on “such regulatory matters.” But according to an anonymous source, Yida Gao’s poor performance and behavior clearly violated the U.S. Securities and Exchange Commission’s (SEC) investor protection rules, making it difficult to raise further funds. Despite the booming crypto market, a representative for Shima Capital revealed that the company is not currently raising funds.

    Shima Capital has also experienced a wave of departures from senior staff in recent months, including Chief Technology Officer Carl Hua, Head of Research Alexander Lin, who left earlier this year to start his own venture capital firm, and Chief Operating Officer and Head of Platform Hazel Chen. The departing executives did not respond to requests for comment. Meanwhile, despite the current bull run in the cryptocurrency market, Shima Capital appears to be struggling. Its latest SEC filing shows that it has approximately $158 million in assets under management – a figure lower than the $200 million raised in 2022.

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