For years, the NEO project's treasury has been managed through an unconventional setup, with hundreds of millions of dollars in crypto assets controlled by personal wallets and lacking multi-signature protections or formal oversight. According to co-founder Da Hongfei, the individual controlling around 85% of these assets is Erik Zhang, the project's other co-founder and core protocol architect.
Hongfei estimates that the native NEO and GAS tokens held by Zhang are currently worth between $200 million and $250 million. This amount exceeds NEO's current market capitalization of $197 million. Zhang has retaliated with accusations of his own, and the two founders have been publicly airing their disputes since December. The conflict has led to rival governance proposals and an unsuccessful mediation effort in Hong Kong.
Hongfei has published a restructuring proposal on GitHub, which calls for relocating the Neo Foundation from Singapore to the Cayman Islands, replacing the current two-founder governance with an independent five-member board, and barring both founders from the board for 24 months. The proposal also involves redistributing approximately 26 million NEO and 40 million GAS to tokenholders. In response, Zhang has proposed an alternative plan that would keep the Foundation in Singapore and allow him to remain on the board.
Zhang's proposal also includes a formal investigation into historical asset management, addressing potential corruption, improper asset transfers, and concealment of public assets. Hongfei has dismissed these accusations, stating that there is no corruption or misuse of funds.
However, some observers note that the numbers are striking, with NEO's treasury holding around $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 second half, comprising bitcoin, ether, stablecoins, fund-of-fund investments, and bank balances, managed by NGD, the entity run by Hongfei. The non-token assets have grown to over $200 million, driven largely by the appreciation of BTC and ETH holdings accumulated through early-stage investment returns. As a result, the treasury is divided almost evenly between two individuals who are no longer communicating productively, each holding leverage over the other and unwilling to make the first move.
Hongfei has framed his proposal as a form of mutual disarmament, where both he and Zhang would sacrifice their individual control over assets. He expressed willingness to cooperate but is unsure if Zhang will do the same. The success of Hongfei's restructuring plan depends entirely on Zhang's cooperation, particularly in transferring the single-signature token holdings to a multi-signature lock address. If Zhang refuses, Hongfei believes the community should decide the course of action.