For years, the NEO project's treasury was managed through a unique 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 other co-founder and architect of the core protocol. Da stated that "around 85% is controlled by Eric alone with single signature," and that it had never been transferred to a multi-signature arrangement. The NEO and GAS tokens held by Zhang are currently valued between $200 million and $250 million, exceeding the project's $197 million market capitalization.
Zhang has countered with accusations of his own, and the two founders have been publicly airing their disputes since December. The conflict has led to rival governance proposals and an unsuccessful mediation effort in Hong Kong. Da's proposal, published on GitHub, calls for the Neo Foundation to be redomiciled in the Cayman Islands, replacing the current two-founder governance with an independent five-member board, and barring both founders from the board for 24 months.
Zhang's counter-proposal involves staying on the board and keeping the Foundation in Singapore. Zhang's plan 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 that there is no corruption or misuse of funds. The project's treasury holds approximately $460 million in assets, roughly double its market value, while the token has dropped 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 framed his proposal as a form of mutual disarmament, where both he and Zhang would sacrifice individual control over assets. However, the success of this plan depends on Zhang's cooperation, and Da is unsure if Zhang is willing to cooperate.