For a long time, the treasury of NEO was managed in an unconventional manner, with hundreds of millions of dollars in crypto assets being controlled through personal wallets without multisignature protections or formal oversight. According to co-founder Da Hongfei, the individual in control of these assets is Erik Zhang, the other co-founder of NEO and the architect of its core protocol. Da stated in an interview, 'Around 85% is controlled by Eric alone with a single signature.
It was never transferred to any individual or multi-signature account.' The native NEO and GAS tokens held by Zhang are currently valued between $200 million and $250 million, according to Da's estimates, surpassing NEO's current market capitalization of $197 million. Zhang, on the other hand, has made accusations against Da, and the two founders have been publicly airing their disputes since December.
The dispute has led to rival governance plans and an unsuccessful mediation attempt in Hong Kong. Da published his restructuring proposal on GitHub on April 9, which includes relocating the Neo Foundation from Singapore to the Cayman Islands, replacing the current two-founder governance with an independent five-member board, and prohibiting both founders from the board for 24 months.
Additionally, it proposes redistributing approximately 26 million NEO and 40 million GAS to token holders. Zhang's counter-proposal involves staying on the board and keeping the Foundation in Singapore. Notably, Zhang's proposal calls for a formal investigation into historical asset management, including provisions to address potential corruption, improper asset transfers, and concealment of public assets.
Da dismissed these provisions, stating, 'I think it's a very blunt and empty accusation. There is no corruption, no misuse of funds.' However, some observers find the numbers striking, with NEO's treasury holding approximately $460 million in assets, roughly double the project's $197 million market value, while the token has dropped 98% from its 2018 peak. The situation has led to a stalemate, with Da characterizing his proposal as 'mutual disarmament.' He explained, 'NGD will lose its control over most of the assets, including the BTC and stablecoins, which are over $200 million.
And Eric will lose his personal control of the majority of the NEO tokens.' Da's restructuring plan relies on Zhang's cooperation for the critical step of transferring the single-signature token holdings to a multisignature lock address. If Zhang refuses, Da believes the community should decide the next course of action.