The treasury of a prominent cryptocurrency project has been managed in an unconventional manner, with hundreds of millions of dollars in crypto assets controlled through personal wallets, lacking multi-signature protections and formal oversight. According to co-founder Da Hongfei, his fellow co-founder Erik Zhang is the individual in control of around 85% of the project's assets, valued between $200 million and $250 million, with single-signature authority. This arrangement has been in place for years, with no transfer to a multi-signature setup or any other entity. The native tokens held by Zhang exceed the project's current market capitalization of $197 million.
The two co-founders have been publicly disputing their differences since December, resulting in rival governance proposals and an unsuccessful mediation attempt in Hong Kong. Da has proposed relocating the project's foundation from Singapore to the Cayman Islands, establishing an independent five-member board, and preventing both founders from serving on the board for 24 months.
Additionally, he suggests redistributing approximately 26 million tokens to holders. In contrast, Zhang's counter-proposal involves maintaining the foundation's current location and his position on the board. Zhang also calls for a formal investigation into historical asset management to address potential corruption and improper asset transfers.
Da has dismissed these accusations, stating there is no evidence of corruption or misuse of funds. The project's treasury holds around $460 million in assets, roughly double its market value, with the token having dropped 98% from its peak in 2018. The situation has led to a stalemate, with both co-founders holding significant leverage over the project's assets and neither willing to relinquish control. Da views his proposal as a form of mutual disarmament, where both he and Zhang would sacrifice individual control over the assets.
However, the success of this plan depends on Zhang's cooperation, which remains uncertain.