The cryptocurrency project NEO has been operating with an unconventional setup, where hundreds of millions of dollars in crypto assets have been controlled through personal wallets with no multi-signature protections and minimal 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 core protocol architect. Da estimated that around 85% of the assets, valued between $200 million and $250 million, are controlled by Zhang alone with a single signature.
The native NEO and GAS tokens held by Zhang are currently worth more than NEO's market capitalization of $197 million. The two co-founders have been publicly disputing since December, resulting in rival governance plans and an unsuccessful mediation effort in Hong Kong. Da has proposed a restructuring plan that involves redomiciling the Neo Foundation from Singapore to the Cayman Islands, replacing the current two-founder governance with an independent five-member board, and redistributing tokens to holders. In contrast, Zhang's 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 of corruption and misuse of funds as baseless. 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 almost evenly between two people who are no longer communicating productively, each holding leverage over the other. Da has framed his proposal as a form of mutual disarmament, where both he and Zhang would relinquish control over the assets.
However, the success of this proposal depends entirely on Zhang's cooperation, and it remains uncertain whether he will agree to transfer the single-signature token holdings to a multi-signature lock address.