For several years, NEO's treasury was managed through an unconventional setup, with hundreds of millions of dollars in cryptocurrency assets controlled by personal wallets, lacking multi-sig 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 stated that approximately 85% of the assets are controlled by Zhang alone, with a single signature, and have never been transferred to a multi-sig or any individual. The native NEO and GAS tokens held by Zhang are currently valued between $200 million and $250 million, exceeding NEO's current market capitalization of $197 million. Zhang has countered with allegations of separate issues, and the two founders have been publicly airing their disputes since December.
The conflict has led to rival governance plans and an unsuccessful mediation effort in Hong Kong. Da's proposal, published on GitHub, calls for relocating the Neo Foundation from Singapore to 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 and improper asset transfers.
Da dismissed these provisions, stating that there is no corruption or misuse of funds. Observers note that NEO's treasury holds approximately $460 million in assets, double the project's 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 mutual disarmament, where both he and Zhang would sacrifice their individual control over assets. He expressed willingness to cooperate but is unsure if Zhang will do the same.
Da's restructuring plan relies on Zhang's cooperation to transfer the single-signature token holdings to a multi-sig lock address, with a proposed timeline of one to three months. If Zhang refuses, Da believes the community should decide the next course of action.