capital of shimaa leading venture fund in the cryptocurrency sector, has faced challenges in seeking a long-term independent auditor.
The venture capital firm, which raised $200 million for its start-up fund and invested in nearly 200 startups, has not undergone a formal audit since its launch in 2021, according to a recent report.
The company’s failure to find an auditor comes despite the fact that it has attracted high-profile backers, including billionaires. bill ackman and Allan Howardformer presidential candidate andres yangand industry heavyweights like Animoca Brands and dragonfly capital.
Still, the Puerto Rico-based firm has faced challenges when it comes to finding a long-term independent auditor, according to documents reviewed by The Block.
Auditors walk away from Shima citing risk metrics
The documents, which included an investor presentation from the summer of 2021, reveal that Shima attempted to retain auditing firm Richey May & Co. to provide audit and tax services.
However, Stephen Vlasak, a partner at Richey May, has confirmed that the firm never officially engaged or issued any audit report for Shima Capital.
Another version of the same presentation suggested that Shima turned to BDO as a potential auditor.
Yida Gao, the founder of Shima Capital, named BDO USA as a potential auditor for Shima in a court filing, and BDO Cayman was named as an auditor in a separate investor update in 2022.
However, in March 2023, BDO informed Shima that it was outside the company’s risk parameters due to a policy change.
Marcum LLP, which recently began appearing in Shima’s regulatory filings, was hired as an auditor. However, it was determined that Shima did not meet Marcum’s risk parameters.
TO ADV form filed in May this year suggests that the fund’s annual statements be subject to an annual audit.
In response to inquiries, a Shima spokesperson said the company is currently working with various auditors, but did not provide further details.
Despite the difficulties in finding an auditor, Shima Capital has become one of the most active investors in the cryptocurrency sector.
However, the fund has also faced controversy, including a lawsuit filed by Gao’s former employer, Adam Struck of Struck Capital Management, and concerns raised about the accuracy of its presentations to investors.
Crypto funds struggle to find auditors
Shima is not the only crypto VC facing challenges in shutting down their accounts.
Animoca Brandsanother active web3 investment firm, recently released audited accounts for 2020, after significant delays.
Animoca President Yat Siu explained that the company’s financial audit process required addressing unique complexities associated with token sales and NFTs.
It is worth noting that crypto companies are also struggling with a lack of funding amid the meteoric rise of artificial intelligence (AI), which has captured the attention of venture capital firms globally.
In the first quarter of this year, the AI industry raised approximately $18 billion in funding, with some of that funding coming at the expense of cryptocurrency companies.
