NEO, the once-prominent "Chinese Ethereum," is embroiled in a high-stakes governance crisis centered on its $460 million treasury, which is split between its two feuding co-founders, Da Hongfei and Erik Zhang. The conflict, which has been aired publicly since December, revolves around a highly unusual and risky custody arrangement where a single individual controls assets worth more than the project's entire market capitalization.
The core of the dispute lies in the treasury's structure. According to co-founder Da Hongfei, approximately 85% of the project's native NEO and GAS tokens—valued between $200 million and $250 million—are held in personal wallets controlled solely by the other co-founder, Erik Zhang, the architect of NEO's core protocol. These tokens are secured by a single signature, with no multi-signature protections or formal oversight. "It had never been transferred to any individual or any multi-sig," Da stated.
This sum is staggering compared to NEO's current market cap of $197 million, highlighting the immense concentration of power. The other half of the treasury, consisting of over 1,100 BTC, ETH, stablecoins, cash, and venture investments (including an unliquidated stake in Binance), is managed by NGD, the entity run by Da Hongfei. This portion has grown to over $200 million, largely through the appreciation of its cryptocurrency holdings.
The founders have put forth rival governance proposals. Da Hongfei's plan, published on GitHub on April 9, calls for a fundamental restructuring: redomiciling the Neo Foundation from Singapore to the Cayman Islands, replacing the two-founder governance with an independent five-member board, barring both founders from the board for 24 months, and redistributing roughly 26 million NEO and 40 million GAS to tokenholders. He frames this as "mutual disarmament," where both he and Zhang would relinquish individual control over their respective halves of the treasury.
Erik Zhang's counter-proposal advocates for keeping the foundation in Singapore, allowing the founders to remain on the board, and, most pointedly, launching a formal investigation into historical asset management to address potential "corruption, improper asset transfers, and concealment of public assets." Da Hongfei has dismissed these accusations as "a very blunt and empty accusation. There is no corruption, no misuse of funds."
The standoff creates a critical impasse. The success of Da's restructuring plan depends entirely on Zhang's cooperation to transfer the single-signature token holdings to a multi-signature lock address. Da has committed to a one-to-three month timeline for this process. When asked what happens if Zhang refuses, Da was candid: "If there's one person holding around half of a crypto native token and not willing to hand over... then what the community should do, I think the answer should come from the community itself."
The dispute follows an unsuccessful mediation effort in Hong Kong and occurs against a bleak backdrop for the NEO token, which has dropped 98% from its 2018 peak. The treasury's $460 million in assets now stands at more than double the project's market value, underscoring the severe disconnect between the project's resources and its market perception.
