Shamarpa escaped to Nepal; the Nepalese king Bahadur Shah, a Hindu, thought he could take advantage of the situation and use a high reincarnate to negotiate with the Tibetan government about the problems with the currency (there was more bogus money circulating in Nepal than the official currency). Unfortunately, the negotiations at the border failed, emotions sparked off and physical attacks happened among the delegates. The Tibetan delegations were captured, and although Shamarpa intervened he could not stop the Nepalese king. The latter even ordered the invasion of parts of Tibet.
An influential Gelug minister, Taktsag Tenpey Gönpo, officially confirmed that Shamarpa had instigated the invasion out of personal desire for revenge. This false story made him look guilty because of the political and military debacle. The Tibetan government asked the Chinese for military support, which ended up in a defeat of the Nepalese army and a peace treaty in 1792.
Shamarpa died in 1792 officially of jaundice at the age of fifty. But rumors went round which said that Shamarpa poisoned himself. Later, a Tibetan minister with the name Gashi Dhorinpa, who had been taken prisoner and was released shortly afterward, wrote:
“I was released after a peace treaty had been negotiated. Shamarpa died and I was taken to his cremation. I have no respect for Shamarpa. His corpse was even stinking, and I presumed that he really committed suicide. But during the cremation I saw with my own eyes that five rainbows in the form of a dome took shape above the place of cremation near Bodhanath in Kathmandu.”
Years later, the 16th Karmapa spoke about this case, the ban and the burying of the Red Crown underneath the monastery of Shamarpa in Lhasa:
“The spiritual merits became smaller and smaller. Many interferences through politicians into spiritual matters happened. Black became white – the truth became untrue. During that time, it did not make sense to approve and to enthrone a Shamarpa. Everything was kept secret. The incarnations appeared as before but they were not revealed.”