Co-Founder Holds Keys to $200 Million in Crypto, Sparking Governance Dispute

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 multisig protections or formal oversight. According to co-founder Da Hongfei, the individual responsible for controlling around 85% of the project's assets is Erik Zhang, the other co-founder and architect of NEO's core protocol.

Da estimates that the native NEO and GAS tokens held by Zhang are currently worth between $200 million and $250 million. This amount exceeds the project's current market capitalization of $197 million.

The two co-founders have been publicly disputing since December, resulting in rival governance plans and an unsuccessful mediation effort in Hong Kong. Da has proposed a restructuring plan that involves redomiciling the Neo Foundation to the Cayman Islands, establishing an independent five-member board, and redistributing approximately 26 million NEO and 40 million GAS tokens to tokenholders. In contrast, Zhang's counter-proposal calls for maintaining the current governance structure, with him remaining on the board, and initiating a formal investigation into historical asset management to address potential corruption and improper asset transfers. Da has dismissed these accusations, stating that 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, while the token has declined by 98% from its 2018 peak. The treasury is split between two halves, with the native NEO and GAS tokens under Zhang's single-signature control and the non-token assets, including bitcoin, ether, and stablecoins, managed by NGD, the entity run by Da. Da has framed his proposal as a form of mutual disarmament, where both he and Zhang would relinquish their individual control over the assets.

However, the success of this proposal depends on Zhang's cooperation, and it remains uncertain whether he will agree to transfer the single-signature token holdings to a multisig lock address.