For years, the NEO treasury has been controlled through personal wallets with no multi-sig protections, a setup that would be unusual for most financial institutions. According to co-founder Da Hongfei, the person in control of hundreds of millions of dollars in crypto 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 funds, worth between $200 million and $250 million, with no multi-sig protections in place. The native NEO and GAS tokens are currently worth more than NEO's $197 million market capitalization. Zhang has accused Da of separate problems, and the two founders have been airing their disputes in public since December.
The dispute has led to rival governance plans, with Da proposing an independent five-member board, the redistribution of tokens to holders, and the relocation of the Neo Foundation from Singapore to the Cayman Islands. Zhang's counter-proposal involves staying on the board, keeping the Foundation in Singapore, and conducting a formal investigation into historical asset management. Da has dismissed Zhang's accusations, stating that there is no corruption or misuse of funds.
The treasury holds around $460 million in assets, roughly double the project's market value, while the token has dropped 98% from its 2018 peak. Da has proposed a mutual disarmament, where both he and Zhang would sacrifice their individual control over assets. However, this plan depends on Zhang's cooperation, and it is unclear what will happen if he refuses to transfer the single-signature token holdings to a multi-sig lock address.