Li Cheng, Head of Marketing at High-Flyer Quant – the hedge fund behind AI startup DeepSeek – has been detained over allegations of accepting illegal commissions totaling $2.78 million, with illicit payments traced back to 2018. The scandal threatens to cast a shadow over DeepSeek, a rising competitor to AI giants like OpenAI.
According to a report from MyDrivers, Li allegedly worked with Meng Pengfei, former manager at China Merchants Securities (CMS) in Shenzhen, to channel funds through the brokerage in violation of rules prohibiting commission kickbacks. 
The scheme reportedly amassed 118 million yuan ($16 million) in total, with Li taking 20 million yuan ($2.78 million), Meng pocketing 80 million yuan ($11 million), and Liu Huan, a CMS private wealth executive, receiving 10 million yuan ($1.37 million) as a ‘thank-you’ payoff.
To conceal the operation, Meng even tried bribing CMS leadership with 3 million yuan ($417,600) in gold bars. But the plot eventually unraveled, leading to arrests and public exposure. High-Flyer Quant has distanced itself, insisting Li acted on his own and without company involvement.
While DeepSeek’s CEO Liang Wenfeng, who also co-founded High-Flyer Quant, is not mentioned in the investigation, the close financial and structural ties between the companies raise concerns about reputational fallout. If proven guilty, Li Cheng is likely to face a severe sentence, marking a dramatic downfall for one of High-Flyer Quant’s key executives.