For a long time, the treasury of NEO was managed in an unconventional manner, with hundreds of millions of dollars in cryptocurrency assets being controlled through personal wallets, lacking multi-signature protections and formal oversight. The individual in control of these assets, according to co-founder Da Hongfei, is Erik Zhang, the other co-founder and architect of NEO's core protocol.
Da stated in an interview, 'Around 85% is controlled by Eric alone with a single signature. It was never transferred to any individual or multi-signature account.' The NEO and GAS tokens held by Zhang are currently valued between $200 million and $250 million, as estimated by Da, surpassing NEO's current market capitalization of $197 million.
Zhang, on the other hand, has made accusations against Da, and the two founders have been publicly airing their disputes since December. The conflict has led to rival governance plans and an unsuccessful mediation effort in Hong Kong. Da published his restructuring proposal on GitHub on April 9, which includes redomiciling the Neo Foundation from Singapore to the Cayman Islands, replacing the current two-founder governance with an independent five-member board, and preventing both founders from serving on the board for 24 months.
Additionally, the proposal involves redistributing approximately 26 million NEO and 40 million GAS tokens to token holders. In response, Zhang's counter-proposal suggests maintaining the Foundation in Singapore and keeping his position on the board. Notably, Zhang's proposal calls for a formal investigation into historical asset management, including provisions to address potential corruption, improper asset transfers, and concealment of public assets. Da dismissed these accusations, stating, 'I think it's a very blunt and empty accusation.
There is no corruption, no misuse of funds.' However, some observers find the numbers 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 divided 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 Da. Da frames 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 Da's restructuring plan relies entirely on Zhang's cooperation, particularly in transferring the single-signature token holdings to a multi-signature lock address. If Zhang refuses, Da believes the community should decide the course of action.