A $200 Million Crypto Project's Fate Hangs in the Balance as Co-Founders Clash

For years, the treasury of NEO, a cryptocurrency project, was managed in a way that would be unconventional for most financial institutions: hundreds of millions of dollars in crypto assets were controlled by personal wallets with no multisignature protection and minimal formal oversight. According to co-founder Da Hongfei, the individual in control of these assets is Erik Zhang, the project's other co-founder and the architect of its core protocol. Da estimates that Zhang alone controls around 85% of the assets, worth between $200 million and $250 million, with no multisignature protection and no transfer to any individual or multisignature wallet. The native NEO and GAS tokens held by Zhang are currently valued at more than the project's $197 million market capitalization. The two co-founders have been publicly airing their disputes since December, resulting in rival governance plans and an unsuccessful mediation effort in Hong Kong. Da has proposed a restructuring plan that involves relocating the Neo Foundation from Singapore to the Cayman Islands, replacing the current two-founder governance with an independent five-member board, and redistributing approximately 26 million NEO and 40 million GAS tokens to token holders. In contrast, Zhang's counter-proposal involves staying on the board and keeping the Foundation in Singapore. Zhang's plan also calls for a formal investigation into historical asset management, including provisions to address potential corruption, improper asset transfers, and concealment of public assets. Da has dismissed these provisions as baseless accusations, stating that there has been no corruption or misuse of funds. However, some observers have raised concerns about the project's financial management, given that the treasury holds approximately $460 million in assets, roughly double the project's market value, while the token has dropped 98% from its 2018 peak. The treasury is split into two halves, with the native NEO and GAS tokens largely under Zhang's single-signature control, and the non-token assets, including bitcoin, ether, stablecoins, and fund-of-fund investments, managed by NGD, the entity run by Da. The result is a treasury divided almost evenly between two individuals who are no longer communicating effectively, each holding leverage over the other and unwilling to make the first move. Da has framed his proposal as a form of mutual disarmament, where both he and Zhang would relinquish their individual control over the assets. He has committed to a one-to-three month timeline for the restructuring, but the success of the plan depends entirely on Zhang's cooperation, particularly in transferring the single-signature token holdings to a multisignature lock address.