Disappearance of Inception Capital's Founder Causes $80M Crypto Fund to Shut Down

An $80 million crypto fund supported by Bill Ackman is shutting down due to its founder David Gan's silence amid an investigation in China. Gan, once a Forbes 30 under 30 honoree, had investors' backing with notable partners like Ackman. Despite a successful fund run, Gan's departure for China led to a halt in investments, a staff reduction, and a limited partner decision to wind down the fund. The firm plans to propose a new investment strategy in October, but its future remains uncertain amid the ongoing legal issues and shaky connections between China and the U.S. crypto markets.

In a surprising turn of events, Shima Capital, a prominent crypto venture capital firm backed by notable investors like Bill Ackman, is shutting down [1]. The closure stems from the founder and CEO, Yida Gao's, sudden departure for China and his silence amidst an ongoing investigation by Chinese regulators.

Gao, a former MIT graduate and Forbes 30 under 30 honoree, had raised $200 million from investors, including Ackman and Galaxy, to establish Shima Capital in 2022 [1]. The firm quickly gained popularity, participating in over 300 deals in the crypto sector. However, recent investigations have uncovered that Gao established a secret offshore entity and funneled assets belonging to the venture fund into it, which is directly against the Investment Advisers Act [1].

Gao's poor performance and behavior, which potentially violate SEC investor protection rules, left the firm struggling to raise additional capital [1]. Moreover, the firm has experienced a significant exodus of top talent, including Chief Technology Officer Carl Hua, Head of Research Alexander Lin, and Chief of Staff Hazel Chen [1].

As of now, Shima Capital plans to propose a new investment strategy in October. However, the future of the firm remains uncertain due to ongoing legal issues and the shaky connection between the Chinese and US crypto markets [1].

It's essential to note that Gao has not been charged with any crime yet. However, the investigation's findings and the subsequent impact on the firm's operations raise concerns about transparency and accountability in the crypto industry.

[1] + https://fortune.com/crypto/2024/06/06/shima-capital-vc-ackman-galaxy-yida-gao/