http://x.com/i/article/2082779091879723008

The DeepSeek Founder Story Silicon Valley Doesn't See

How DeepSeek's founder became a symbol of China's technological ambition， market anxiety， and the tension between the two.

To most of the world， Liang Wenfeng is the founder who made Silicon Valley nervous： the reclusive engineer behind DeepSeek， the open-source AI lab that trained a frontier-class model for a fraction of what American labs spend. In China， however， the story is far more complicated. The same man celebrated abroad as proof of China's technological rise is also viewed by many retail investors at home as a symbol of a financial system they believe has worked against them.

This is not really a story about whether quant trading is good or bad. It is a story about something more interesting： how the same person can represent technological progress to one group and financial frustration to another.

The Founder Who Built Two Different Machines

DeepSeek isn't Liang's first company. It's the second thing he built with the profits from the first.

In 2015， Liang founded High-Flyer， a quantitative trading firm， after several years running his own quant operation. It grew into one of China's "four giants" of quant investing， with assets under management reportedly exceeding ¥100 billion by 2021. According to a report by the Securities Times in January 2026， citing data from private equity ranking platform Paimaiwang， High-Flyer achieved remarkable returns： an average annualized return of around 85% over the three years ending in 2025 and over 100% over the five years ending in 2025， with positive returns recorded in each of those years. （Notably， High-Flyer experienced drawdowns in late 2021 and during 2022-2023， though these were mitigated by subsequent strong performance

Then， in 2023， Liang used that cash flow to spin up something that operated under a very different set of incentives： DeepSeek， a general-purpose AI research lab built on a strict rule of no outside fundraising， no roadshows， no rush to commercialize； all of it funded， for years， entirely out of High-Flyer's trading profits. When DeepSeek's R1 model launched in January 2025 at a training cost far below its Western rivals， it briefly wiped billions off Nvidia's market cap and forced Silicon Valley to take Chinese open-source AI seriously.

That's the story most Western coverage tells： quiet genius， minimal funding， maximum impact. What's missing from it is where the money actually came from： a trading operation that a large number of Chinese retail investors believe has spent years profiting at their direct expense.

Why China's Retail Investors See Him Differently

Start with the plainest version of the belief： Chinese retail investors do not necessarily see quant funds as a symbol of innovation. Many retail investors have come to see them as a machine that extracts money from ordinary traders. In 2025， China's major quant funds were reportedly all profitable， with High-Flyer's return coming in above 55%， while retail investors， on average， reportedly lost money. The exact figures here are contested， and I want to be careful not to overstate them as settled fact. What isn't contested is the belief they've produced.

In Chinese financial commentary， two mechanisms come up constantly： the idea that algorithms detect and exploit predictable retail behavior （buying into a stock's apparent breakout， then exiting and leaving latecomers holding the position）， and the broader claim that pricing itself becomes disconnected from fundamentals， with financially healthy companies aggressively shorted and weaker ones pumped on narrative. Whether or not one accepts this framing， it explains a very specific fear： that price is no longer set by earnings or innovation， but by whether an algorithm judges a stock's retail base to be exploitable.

That resentment hardened in 2025， when two compliance scandals involving people connected to High-Flyer emerged within months of each other. High-Flyer said both cases involved individual misconduct， not company policy. Legally， that distinction matters. But for investors already skeptical of quant trading， the scandals felt less like isolated incidents than confirmation of a system they already distrusted.

But the anger toward quant funds was never only about the traders themselves. It was also about the market structure that allowed them to flourish.

The Market That Made Liang Rich

That distrust doesn't exist in a vacuum： it's tied to a specific era of market reform， and to the officials who built it. Fang Xinghai spent nine years， until 2024， as vice chairman of the China Securities Regulatory Commission， and became one of the most visible champions of the market reforms： expanded short-selling tools， refinancing mechanisms that let restricted shares be lent out for shorting， and steady-state IPO issuance. Quant trading， as an industry， grew up inside the regulatory environment he helped build.

On July 24， 2026， Fang was announced to be under investigation for suspected serious violations of Party discipline and the law. No charges have been filed and no findings announced； this is the opening stage of a disciplinary process， not a verdict. He's not the first CSRC official to fall in recent years， but he is the most senior markets-policy figure caught up in the wave， and the online reaction was instant： commentary framed his fall as long-overdue accountability for the architecture quant trading runs on， with one listed-company executive publicly asking online what the point of fundamental research was if algorithms could out-trade it regardless. Regulators had already been tightening the rules on high-frequency trading since mid-2025； Fang's investigation， whether or not it's formally connected， landed on top of that arc and read， to a lot of retail investors， as confirmation that the people who built the system were finally being scrutinized too.

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