For years, $NEO‘s trove was held in a setup that would be unusual for most financial institutions: hundreds of millions of dollars of crypto assets were controlled through personal wallets, without multisig protections and with little formal oversight.
That person, according to co-founder Da Hongfei, is Erik Zhang, $NEOThe other co-founder of and the architect of its main protocol.
“About 85 percent is controlled by Eric alone with a single signature,” Da said in an interview. “It was never transferred to any individual or multi-signature.” The native $NEO And $GAS The tokens Zhang holds are currently worth between $200 million and $250 million, Da estimated. It’s more than $NEOThe current market capitalization of $197 million.
Zhang, for his part, blamed Da for separate problems. The two founders have been publicly exposing these differences since December.
The fight has since given rise to rival governance plans and an unsuccessful mediation effort in Hong Kong.
Da published its restructuring proposal on GitHub on April 9. It calls for re-domiciling the Neo Foundation from Singapore to the Cayman Islands, replacing the current governance of two founders with an independent five-member board, excluding the two founders from that board for 24 months and redistributing around €26 million. $NEO and 40 million $GAS to token holders.
Zhang’s counterproposal called for remaining on the board by keeping the Foundation in Singapore, not moving it to the Cayman Islands.
Specifically, Zhang’s proposal calls for a formal investigation into the management of historic assets, including provisions to address potential corruption, improper asset transfers, and concealment of public assets.
Da categorically rejected these provisions. “I think it’s a very direct and empty accusation,” he said. “There is no corruption or embezzlement.”
For some observers, however, the figures seem quite gloomy. $NEO‘s treasury contains around $460 million in assets, roughly double the project’s market value of $197 million, while the token has fallen 98% from its 2018 high.
Mutual disarmament
$NEOThe FY2025 financial report, its first full disclosure since 2020, revealed more than 1,100 $BTCover $100 million in stablecoins and cash, and a portfolio of venture capital investments including an unliquidated stake in Binance.
Da divided the treasure into two halves. The first, the native $NEO And $GAS tokens, rests largely under Zhang’s sole signature control. The second, Bitcoin, Ethereum, Stablecoins, funds of funds and bank balances, is managed by NGD, the entity led by Da.
These once relatively modest non-token assets have grown to over $200 million, largely due to the appreciation of its $BTC and ETH holdings accumulated through early-stage investment returns.
The result is a cash flow split almost equally between two people who are no longer talking productively, each holding an advantage over the other, and neither willing to act first.
Da presented his proposal as mutual disarmament.
“NGD will lose control of most assets, including the $BTC and stablecoins, which are worth more than $200 million. And Eric will lose his personal control over the majority of $NEO chips,” he said.
“Basically, Eric and I have to sacrifice our individual control over the assets. I think that’s the fundamental change.”
He said he wants to, but he doesn’t know if Zhang is.
Da’s restructuring is entirely dependent on Zhang’s cooperation for its most critical step of transferring single-signature token holdings to a multisig lock address. In an April 10 AMA, Da committed to a deadline of one to three months.
When asked what would happen if Zhang refused, Da was frank.
“If there is a person who owns about half of a native crypto token and is not willing to hand over multi-signature constitutional governance, then what the community should do, I think the answer should come from the community itself.
CoinDesk reached out to Erik Zhang for comment and had not heard back at the time of publication.
