For several 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, lacking multi-signature protections and formal oversight. According to co-founder Da Hongfei, the individual in control of these assets is Erik Zhang, the project's other co-founder and architect of its core protocol.
Da stated in an interview, 'Around 85% is controlled by Eric alone with single signature. It had never been transferred to any individual or any multi-sig.' The native NEO and GAS tokens held by Zhang are currently valued between $200 million and $250 million, exceeding the project's current market capitalization of $197 million.
Zhang has countered with accusations against Da, and the two founders have been publicly airing their disputes since December, resulting in rival governance plans and an unsuccessful mediation effort in Hong Kong. Da's proposal, published on GitHub, calls for the Neo Foundation to be redomiciled from Singapore to the Cayman Islands, replacing the current two-founder governance with an independent five-member board, and redistributing approximately 26 million NEO and 40 million GAS to tokenholders.
In contrast, Zhang's counter-proposal suggests maintaining the Foundation's presence in Singapore and retaining his position 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. Da dismissed these provisions, 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 approximately $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 portion, comprising bitcoin, ether, stablecoins, fund-of-fund investments, and bank balances, managed by NGD, the entity run by Da.
Da framed his proposal as a form of mutual disarmament, where both he and Zhang would relinquish control over the assets. 'NGD will lose its control over most of the assets, including the BTC and stablecoins, which are over $200 million.
And Eric will lose his personal control of the majority of the NEO tokens,' he said. Da's restructuring plan relies on Zhang's cooperation for its most critical step, transferring the single-signature token holdings to a multi-signature lock address, with a committed timeline of one to three months.