Last week's biggest news was undoubtedly the suspected runaway melon owner Zhao Bei and the zeroed Liu Yuan No. 2:
Liu Yuan No. 2 Fund is a subjective options strategy private equity fund on the cryptocurrency investment platform Matrixport, operated by insider Zhao Bei. This fund once claimed a target return of three times but lost 97% of the 30 million RMB raised in just one year, with the net value almost dropping to zero, ultimately being forced to liquidate.
This review will outline the entire process of Liu Yuan No. 2 from fundraising to liquidation along a timeline, deeply analyzing the personal story of trader Zhao Bei, the operational loopholes of the fund company Matrixport, and the various points of controversy that emerged from community public opinion. Key figures and product tables will also be included where necessary for better understanding.
1️⃣ Overview of key figures and products
(1) Liu Yuan No. 1 Fund: The first phase of the subjective options strategy fund launched by Zhao Bei at the end of 2022. It achieved a return of 133.99% over 134 days and ended on May 2, 2023. The scale was very small (the net value reportedly did not exceed 1 million RMB) but the performance was impressive, becoming a successful model for the fundraising of Liu Yuan No. 2.
(2) Liu Yuan No. 2 Fund: The second phase of the subjective options strategy fund product on the Matrixport platform, opened for subscription on May 7, 2023, with a minimum investment of 5 ETH and a lock-up period of one year, targeting a return of 3 times. Approximately 30 million RMB (equivalent to over 2000 ETH) was actually raised. It mainly invested in ETH options, with no stop-loss mechanism and no limit on maximum drawdown. Ultimately, it was liquidated before the lock-up period expired due to a massive loss of 97%.
(3) Zhao Bei, nicknamed 'Cup Size': Trader of the Liu Yuan series fund (fund manager). His real name is unknown, coming from a mining background, he became famous for doubling the returns of Liu Yuan No. 1. He raised Liu Yuan No. 2 based on personal credibility and connections. It is rumored that he invested 2 million RMB of his own funds and similarly lost everything. After liquidation, he was removed from cooperation with Matrixport and left in disgrace. There is widespread speculation that he fled the country due to the investment disaster and potential legal pressures.
(4) Matrixport: A well-known cryptocurrency financial platform founded by Wu Jihan, providing a strategy investment sector that allows traders to issue products similar to private equity funds. The Liu Yuan fund series was issued on this platform. The platform claims to have rigorous risk control, but in reality, the entry threshold for strategy products is extremely low, allowing 'any cat or dog to issue a fund'. The Liu Yuan No. 2 incident exposed its risk control loopholes and triggered a crisis of trust among users.
(5) A Very Large Orange @很大很大的橙子 : A well-known KOL in the cryptocurrency sphere and one of the early supporters of Liu Yuan No. 2. As a friend of Zhao Bei, he subscribed for 40 ETH to show support, but after the liquidation, only 1.29 ETH remained. He humorously remarked, 'Everyone help me think about how to turn this 1.29 ETH back into 40 ETH, or should I gamble on a doomsday (option)?' and questioned Matrixport's practice of allowing anyone to issue funds as very absurd.
6) Proletarian Monk. Revealed rumors that Zhao Bei was 'drained of his last value and expelled' due to massive losses and concerns over legal consequences, forcing him to flee overseas (not verified).
Ps: The above information is compiled from publicly available social platform content and has not been officially endorsed, intended only for melon-eating reference.
2️⃣ Liu Yuan No. 2 Fund Timeline: From fundraising to liquidation
(1) May 7, 2023 – Fundraising begins: Riding on the coattails of the doubling myth of Liu Yuan No. 1, Zhao Bei launched the 'Liu Yuan No. 2' fund on the Matrixport platform, opening it for user subscriptions. The platform packaged it as an actively managed options strategy product, claiming that participation in high-end options investment could start from 5 ETH without requiring investors to understand options knowledge. Zhao Bei's network within the community was instrumental—investors, including prominent KOL Teacher Big Orange (i.e., A Very Large Orange) and some early BNB holders, actively participated. In a short time, the fund raised about 30 million RMB (in ETH). Many were drawn in by the 'doubling returns' reputation of Liu Yuan No. 1. However, it was later pointed out that Liu Yuan No. 1 had a very small actual scale (the net assets reportedly did not exceed 1 million RMB), and its performance lacked reference value—this hidden danger was not given enough attention initially.
(2) Late May 2023 – Official operation: After the fundraising of Liu Yuan No. 2 was completed, it quickly began trading. It is reported that Zhao Bei primarily traded ETH options on Deribit, with no stop-loss mechanism set. He either lost all the principal or earned three times the return, triggering automatic liquidation; the fund would also automatically liquidate after the one-year lock-up period expired. Such an aggressive 'All in' mechanism was selectively ignored by many participants at the time, with everyone dreaming of recreating the miracle of the first fund. However, the market did not give Zhao Bei many opportunities to perform.
(3) Mid-2023 – Net value suffers heavy losses: About a few months after the fund's operation, the ETH market experienced a one-sided decline. Zhao Bei lamented in a public article that due to the continuous free-fall of ETH, the Liu Yuan fund wiped out all previous bull market gains in just a week, stating, 'At this point, the net value is gone, but the position remains'. In other words, the net value has returned to its starting point or even lower, yet the position remains stubbornly held. Many investors began to feel uneasy. During this period, Zhao Bei appeared in the group multiple times to explain strategies and risks, trying to comfort the holders, but the losses had become a foregone conclusion, 'actually, it is of no use'. Some early supporters of his gradually turned to skepticism and even ridiculed him on social platforms, with public opinion shifting sharply.
(4) Second half of 2023 – Continued slump: As the market fluctuated, Liu Yuan No. 2's net value continued to decline. Reports suggest that the net value curve has hardly ever touched the initial 1.0 again, struggling at low levels for most of the time. For many investors, this money has essentially 'cooled down'. However, due to the lock-up period not being over, they cannot redeem it early and can only watch the net value shrink. During this time, the price of ETH occasionally rebounded, but the fund had previously suffered severe losses, and the account did not take advantage of the upturn. It aptly reflects the saying: 'The price has come back, but the position is gone'—by the time the market rebounded, the fund had already lost to the point of being empty. Some investors began jokingly calling Liu Yuan No. 2 the 'zero fund', teasing in the group, 'Does the teacher have a Plan C?'
(5) May 2024 – Liquidation outcome: As the one-year lock-up period approached, Liu Yuan No. 2's net value was only about 0.03 (3% of the initial net value of 1). The cumulative loss reached approximately 97%. According to the initial agreement, the product was to be liquidated early when the net value shrank to only 3%, officially declaring the fund a failure. The Matrixport platform followed the rules to liquidate the fund, returning what little assets remained to investors. For example, A Very Large Orange, who invested 40 ETH, ultimately only received back 1.29 ETH; another investor who put in 70,000 USDT reportedly had only about 2,000 USDT left. It can be said that the vast majority of participants' capital vanished. During the liquidation process, the fund company (Matrixport) also swiftly 'cut ties' with trader Zhao Bei: it is rumored that he was unilaterally terminated by the company when the net value hit rock bottom, equivalent to being 'fired'. Thus, this dream of tripling profits officially shattered, becoming yet another painful lesson in the cryptocurrency sphere.
3️⃣ Zhao Bei: From star trader to being abandoned by all
Zhao Bei, whose online name is a homophone for 'cup size', is a Twitter account holder and was once a rising star in the cryptocurrency sphere. He is undeniably the main character in this farce. With the impressive doubling performance of Liu Yuan No. 1, he initially gained the trust of many and was hailed as an options expert. The issuance of Liu Yuan No. 2 largely depended on Zhao Bei's personal credibility and connections within the community: many investors bought in due to their personal ties to him. A very large orange candidly stated that although he found the Matrixport model, where anyone could launch a fund, quite ridiculous, he still 'supported Zhao Bei with 40 ETH' as a friend. Unfortunately, success and failure both stem from relationships—when the fund's net value plummeted, the friends who initially supported Zhao Bei quickly turned against him, with ridicule and accusations echoing in the group, and former friends became the harshest critics.
In the face of criticism, Zhao Bei has not been inactive. He has appeared in the community multiple times trying to explain the reasons for the strategic failure, claiming that he too is deeply in the red. Insiders say that Zhao Bei invested about 2 million RMB of his own funds into Liu Yuan No. 2, ultimately suffering the same total loss. In other words, he was in the same boat as the investors, both facing the fate of sinking. However, this did not quell the public anger—some directly accused his gambler-like operations of ruining everyone's money, while others joked, 'It's all Xiao V's fault, not the teacher's', shifting the blame in a sarcastic manner to Ethereum and Vitalik.
After the dust of the liquidation settled, Zhao Bei himself also disappeared from public view. Reports indicate that Matrixport has already removed him from their ranks, and the cooperation between the two parties has ended. A very large orange @很大很大的橙子 revealed that he received a message from Zhao Bei at the time of liquidation, saying, 'The remaining money will be settled for everyone within three days', implying that Zhao Bei was still handling the fund's final matters but no longer represented the company. There are rumors that Zhao Bei chose to flee the country due to massive investment losses and potential legal disputes. Even a highly satirical post fabricated: 'On the day of the second phase's liquidation, fund manager Zhao Bei swallowed a gun belonging to a male investor in his Bangkok home out of guilt towards the investors.' This is evidently a piece of dark humor and not a true story, yet it indirectly reflects Zhao Bei's tarnished reputation and dire situation after this incident. As a harsh saying in the cryptocurrency sphere goes: 'The day the cryptocurrency fund is liquidated is the day the trader dies'; it may be exaggerated but aptly describes the simultaneous 'death' of Zhao Bei's career and social standing.
4️⃣ Issues with the fund company: Controversies surrounding Matrixport's operations and risk control
The explosion of Liu Yuan No. 2 is not only Zhao Bei's personal failure but also shines a spotlight on the platform behind it, Matrixport. As a well-known cryptocurrency financial service provider founded by Wu Jihan, Matrixport claims to offer various fund products under the guise of 'strategic investment', asserting strict risk control and asset management separation to ensure user asset safety. However, it has been proven that there are many operational management loopholes in the Liu Yuan No. 2 incident.
(1) Low entry threshold, lack of risk control: The product design of Liu Yuan No. 2 is extremely aggressive, with no stop-loss mechanism, allowing for a maximum loss of 100%. This risk setting, unimaginable in traditional finance, surprisingly passed the platform review on Matrixport, indicating that their risk control measures are very lax. A very large orange bluntly stated that Matrixport's model, where 'any cat or dog can issue a fund', is very absurd. Indeed, the platform almost allows any aspiring trader to issue products and raise funds without strict scrutiny of their qualifications and strategy risks. Does the management company behind Liu Yuan No. 2 have a real-time monitoring mechanism for net value and enforce stop-loss? The outcome shows that it does not. The fund was liquidated only after the net value fell to 3%, during which investors were completely unaware that the fund was on the verge of liquidation, which is simply unacceptable management.
(2) Insufficient information disclosure: Many Liu Yuan No. 2 investors only learned afterward that Liu Yuan No. 1 had a very small scale and that Liu Yuan No. 2 had no risk control thresholds. If the platform could have fully disclosed these elements during fundraising, perhaps some individuals would have reconsidered. However, Matrixport's promotion of this series of high-risk fund products focused more on high-yield stories, while failing to transparently disclose potential extreme risks and operational details (only general risk warnings were mentioned in the agreements). Additionally, whether the net value data during the fund's operation was timely disclosed to holders remains a question. Some investors expressed difficulty in obtaining accurate changes in the fund's net value during the lock-up period, only to learn how much they had lost at the final liquidation. This undoubtedly exacerbated users' distrust of the platform.
(3) Related performances of other private equity products: Liu Yuan No. 2 is not the only strategy product on Matrixport. The platform has also launched various private equity strategies such as quantitative arbitrage, CTA trend, and DeFi mining. While the most publicly exposed failure case is Liu Yuan No. 2, the community has started to question: could there be another Liu Yuan No. 2? Some compare the Liu Yuan series to a gamble; winning (Liu Yuan No. 1) brings glory, but losing (Liu Yuan No. 2) results in total loss. These types of high-leverage, high-volatility private equity products, if lacking strict supervision, are likely to repeat their mistakes. The tragedy of Liu Yuan No. 2 undoubtedly serves as a warning bell for other strategy funds currently or soon to be offered by Matrixport. If the platform does not timely enhance risk control and review standards, similar loss incidents may occur again, ultimately harming the confidence of the entire user base.
Liu Yuan No. 2 exposed severe flaws in Matrixport's product issuance and risk management. As the Orange Cat Laboratory commented: 'Isn't their risk control and management too insincere? No stop-loss positions, insufficient disclosure, and any cat or dog can issue a fund to join the fun.' For a platform that prides itself on professionalism, this incident undoubtedly lost considerable points in operational compliance. Many investors expressed that their trust in Matrixport has plummeted, stating bluntly, 'The lives of leeks are also lives... I dare not play with Matrixport anymore.'
5️⃣ KOL's views and the perspectives of melon-eating masses
After the news of Liu Yuan No. 2's liquidation spread, the cryptocurrency community was indeed buzzing, with various KOLs and spectators expressing their opinions, forming a large-scale social media spectacle. Below are excerpts of some major hot comments and voices:
(1) A very large orange (Teacher Big Orange): As an investment victim, he appeared on platforms X and Binance Square, self-mockingly describing his experience as '40 ETH -> 1.29 ETH's bloody loss journey'. He jokingly asked netizens for advice on how to turn the remaining 1.29 ETH back into the original 40 ETH principal, saying, 'How about betting on a doomsday (option)?'. This self-deprecating humor reveals the helplessness of investment failure while hinting that Liu Yuan No. 2 itself was a do-or-die gamble. Additionally, the big orange revealed that Zhao Bei had left Matrixport and complained that the platform's mechanism allowed anyone to issue funds was unreliable. He even joked, 'Upon hearing the news that Teacher Zhao Bei was fired, the price of Ethereum rose in response', humorously labeling Zhao Bei as a contrary indicator of Ethereum's performance, eliciting a wave of laughter.
(2) Proletarian Monk (Little Monk): Summarized the fate of the trader with a rather spicy remark: 'The day the cryptocurrency fund is liquidated is the day the trader dies.' He described in a social post that after Liu Yuan No. 2 lost 97% and was liquidated, Zhao Bei, this 'cup size teacher', was ruthlessly kicked out after the fund company drained the last bit of value, making it a tragic tale. The intensity of the language reflects both a sentiment of the event and an implicit condemnation of Zhao Bei (even bearing a curse-like meaning). This statement has spread widely in the community and has become one of the 'golden sayings' of the Liu Yuan No. 2 incident.
(3) Insider group chat revelations: Some netizens shared what they claimed were snippets from the Liu Yuan No. 2 investment group, showing some investors in an agitated state, with even threats to hold Zhao Bei legally accountable. 'Once the money is lost, there’s no more mercy', an investor angrily pointed out that the fund company cut ties with Zhao Bei as soon as things looked bad, describing Matrixport as irresponsible towards both Zhao Bei and the investors. Another anonymous netizen mocked, 'It's all Xiao V's fault, not the teacher's', ascribing the losses to Vitalik (sarcastically hinting at recent pressure from him or Ethereum’s underperformance). This self-mocking humor filled the group chat post-incident, with everyone exchanging quips to diffuse their indignation.
(4) Media and third-party comments: Mainstream cryptocurrency media have rarely reported on this matter, but some columns and self-media have provided commentary. The Orange Cat Laboratory published an article on Binance Square, detailing the accident of Liu Yuan No. 2, questioning Matrixport's inaction on risk control, and sympathetically stating, 'The lives of leeks are also lives', calling on the platform to treat users well. Another article reflected on the Ethereum ecosystem in light of this incident: 'Price is very important; without price increases, all stories are empty'—the disastrous failure of Liu Yuan No. 2 can largely be attributed to the ETH price not performing as expected, leading to a failure of strategy. Some public accounts even wrote satirical fake news titled 'Zhao Bei Swallows Gun' to attract attention. In summary, on platforms like Weibo, WeChat, and X, Liu Yuan No. 2 became a hot topic, sparking various discussions about investment risks, trust endorsements, and empathy.
In summary: The community's reaction to the Liu Yuan No. 2 incident displays a polarized sentiment: on one hand, the onlookers revel in the misfortune, enjoying the spectacle without shyness, with all sorts of jokes flying around; on the other hand, many rational voices are reflecting on the importance of risk education, reminding everyone to keep their eyes open and recognize the high risks behind high returns. Regardless, this farce has added countless talking points to the cryptocurrency sphere, making for a bumper crop of 'melons', but it leaves the parties involved with a bitter fruit that is difficult to swallow.
6️⃣ Progress in rights protection
After the liquidation of Liu Yuan No. 2, have the affected investors taken any further actions beyond voicing complaints on social media? From the information currently available, there have been no large-scale collective lawsuits or offline rights protection events. This may be due to the following reasons:
(1) Most investors are well aware that this is a high-risk speculation with strong self-bear consequences. A popular saying in the cryptocurrency sphere goes: 'If you lose everything, just drink three cups of punishment wine.' It means that if you lose it all, you can only accept your misfortune. Most participants in Liu Yuan No. 2 are insiders who understand that playing the doubling game with options entails the possibility of going to zero, so they often have the mindset of 'losing means accepting it'. For someone like the very large orange, openly complaining and self-mocking is already considered a relatively calm and rational reaction. He did not indicate any intention to hold Zhao Bei or Matrixport accountable, but rather humorously referred to his remaining 1.29 ETH as 'the capital turned upside down' to lighten the mood.
(2) From a legal perspective, seeking rights protection is also challenging. Zhao Bei is not the main entity for public fundraising; his actions occurred through the Matrixport platform, making the responsibility boundaries quite vague. Moreover, Matrixport likely stated in the product agreement that investors bear their own risks. If investors signed these agreements, seeking compensation would encounter legal obstacles. Additionally, since Matrixport operates abroad, even if someone wanted to report it for illegal fundraising domestically, the regulatory authorities' cross-border enforcement may not keep up. In this situation, many victims may feel they have nowhere to turn for redress and can only give up.
(3) This does not mean there is no response. There are rumors that a few large-loss investors privately contacted lawyers to explore legal avenues. It is rumored that Zhao Bei chose to leave the country to avoid the storm because he felt that domestic investors might take legal action. Although the authenticity is hard to determine, it reflects the level of anger among some investors. Some communities have also proposed forming rights protection groups to gather evidence and prepare to report to the relevant authorities. However, as of now, there have been no substantial collective rights protection results exposed.
(4) Interestingly, Matrixport has remained silent regarding the Liu Yuan No. 2 incident. There has been no public apology or explanation, nor any compensation scheme. It is speculated that they may tacitly assume this is a case of investment failure that users bear themselves, hence their lack of intervention. This attitude undoubtedly left some investors feeling disheartened, but it was also to be expected: in the unclear legal gray area, rights protection often lacks leverage. The victims of Liu Yuan No. 2 have largely chosen to 'punish' the parties involved through public opinion and reputation.
7️⃣ Conclusion
From a glorious fundraising to a bleak liquidation, the Liu Yuan No. 2 fund completed a rollercoaster-like journey in less than a year. It left investors with painful losses and Zhao Bei with a ruined reputation, also ringing alarm bells for the entire cryptocurrency investment community. Through this event, we have witnessed the collision of human greed and the ruthlessness of the market: everyone initially dreamed of getting rich, but in the end, it played out absurdly like 'Zhuang Zhou dreaming of a butterfly'. Please stay tuned to the Crypto Golden Monkey, as a senior melon eater in Web3, I will collect all the melon materials online for you in the first instance, ensuring everyone enjoys and digests them thoroughly!
Finally, special thanks to:
The big news from the melon owner Zhao Bei, seeing the teacher still active on Twitter, hopes to see the teacher return as a king in the future!
Thanks to Proletarian Monk and A Very Large Orange for providing first-hand melons.
Note:
This archaeological document has been collected and organized by @Web3WKong Crypto Golden Monkey. If there are any omissions or inaccuracies in the organization, please feel free to point them out!
