The cryptocurrency project NEO has been operating with an unusual financial setup, where hundreds of millions of dollars in crypto assets have been controlled through personal wallets with no multisig protections and limited formal oversight. According to co-founder Da Hongfei, the individual in control of around 85% of these assets is Erik Zhang, the project's other co-founder and core protocol architect.
Da estimates that the native NEO and GAS tokens held by Zhang are currently worth between $200 million and $250 million, exceeding NEO's current 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 approximately 26 million NEO and 40 million GAS to tokenholders. In contrast, Zhang's counter-proposal suggests staying on the board and keeping the Foundation in Singapore, while also calling for a formal investigation into historical asset management to address potential corruption and improper asset transfers.
Da has dismissed these accusations, stating that there is no corruption or misuse of funds. The project's treasury holds around $460 million in assets, roughly 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's proposal is framed as mutual disarmament, where both he and Zhang would sacrifice their individual control over assets. However, the success of this proposal depends on Zhang's cooperation, and Da is unsure if Zhang is willing to cooperate.