For years, the treasury of NEO has been managed in an unconventional manner, with hundreds of millions of dollars in cryptocurrency assets controlled through personal wallets, lacking multi-signature protection 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 NEO's core protocol. Da estimates that Zhang alone controls around 85% of the assets with a single signature, valued between $200 million and $250 million. This amount exceeds NEO's current market capitalization of $197 million.
The native NEO and GAS tokens held by Zhang have never been transferred to a multi-signature setup. Zhang has countered with accusations against Da, and the two founders have been publicly airing their disputes since December. The conflict has led to rival governance proposals and an unsuccessful mediation attempt in Hong Kong. Da has proposed a restructuring plan, which includes relocating the Neo Foundation from Singapore to the Cayman Islands, establishing an independent five-member board, and barring both founders from the board for 24 months.
Additionally, Da's plan involves redistributing approximately 26 million NEO and 40 million GAS tokens to tokenholders. In response, Zhang has proposed an alternative plan that involves staying on the board and keeping the Foundation in Singapore. Zhang's plan also calls for a formal investigation into historical asset management, addressing potential corruption, improper asset transfers, and concealment of public assets.
Da has dismissed these allegations, stating that there is no corruption or misuse of funds. However, some observers find the numbers striking, with NEO's treasury holding around $460 million in assets, roughly double the project's market value, while the token has dropped 98% from its 2018 peak. The situation has resulted in a stalemate, with both founders holding leverage over each other, each unwilling to make the first move. Da has framed his proposal as a form of mutual disarmament, where both he and Zhang would relinquish their individual control over assets.
Da is willing to make this sacrifice but is uncertain if Zhang is willing to do the same. The success of Da's restructuring plan relies entirely on Zhang's cooperation, particularly in transferring the single-signature token holdings to a multi-signature lock address. Da has committed to a one-to-three month timeline for this process. If Zhang refuses to cooperate, Da believes the community should decide the next course of action.