The treasury of a prominent cryptocurrency project has been managed in an unconventional manner, with hundreds of millions of dollars in digital assets controlled by a single individual through personal wallets, lacking multi-signature protections and formal oversight. According to co-founder Da Hongfei, this individual is Erik Zhang, the project's other co-founder and core protocol architect. Da estimates that Zhang alone controls around 85% of the project's assets, worth between $200 million and $250 million, using a single signature, without ever transferring them to a multi-signature setup.
The native tokens held by Zhang are valued at more than the project's current market capitalization of $197 million. The two co-founders have been publicly disagreeing since December, resulting in competing governance proposals and an unsuccessful mediation attempt in Hong Kong.
Da's proposal, published on GitHub, suggests relocating the project's foundation from Singapore to the Cayman Islands, establishing an independent five-member board, and barring both founders from the board for 24 months. Additionally, it recommends redistributing approximately 26 million tokens to holders. In contrast, Zhang's counter-proposal involves remaining on the board and keeping the foundation in Singapore.
Zhang also calls for a formal investigation into historical asset management, including potential corruption and improper asset transfers. Da dismisses these accusations, stating that there is no corruption or misuse of funds. The project's treasury holds around $460 million in assets, roughly double its market value, while the token has dropped 98% from its peak in 2018.
The situation has led to a stalemate, with each co-founder holding significant leverage over the other. Da views his proposal as a form of mutual disarmament, where both he and Zhang would relinquish control over the assets.
However, the success of this proposal depends on Zhang's cooperation, which remains uncertain.