A governance crisis at the NEO Foundation has escalated after co-founder Da Hongfei revealed that fellow co-founder Erik Zhang holds up to $250 million in project assets in a single-signature wallet, creating a massive single point of failure for the layer-1 blockchain project.
"Around 85% is controlled by Eric alone with single signature," Da said in an interview, adding that the funds had never been transferred to a more secure multi-sig wallet. The admission comes amid a public and increasingly bitter dispute between the two founders over the future direction of the project.
The assets in question, native NEO and GAS tokens, are worth between $200 million and $250 million, a sum that exceeds NEO's entire $197 million market capitalization. The project's total treasury, split between Zhang's tokens and over $200 million in non-token assets managed by Da, sits at approximately $460 million, even as the NEO token has fallen 98% from its 2018 peak.
The dispute now centers on two competing restructuring proposals. Da's plan, published on April 9, calls for transferring the assets to a multi-signature wallet and establishing an independent board. Zhang’s counter-proposal demands an investigation into historical asset management, suggesting a deep-seated conflict that puts the project's massive treasury and its future at significant risk.
The public feud has thrown the NEO community into turmoil, with the two founders using social media and GitHub to air their grievances. Da Hongfei's proposal aims for what he calls "mutual disarmament," where both he and Zhang would relinquish direct control over the treasury assets.
"Basically, me and Eric need to sacrifice our individual control over assets. I think that's the fundamental change," Da stated.
His plan involves redomiciling the Neo Foundation from Singapore to the Cayman Islands and barring both founders from a new, five-member independent board for 24 months.
Erik Zhang’s counter-proposal, however, suggests a different path. He has called for staying on the board and keeping the foundation in Singapore. Most critically, his proposal includes a call for a formal investigation into historical asset management, including looking into potential corruption and improper asset transfers.
Da has dismissed these as "blunt and empty accusations." The standoff leaves the project in a precarious position. Da's restructuring is entirely dependent on Zhang's cooperation to move the funds from the single-signature wallet.
The resolution of this conflict is critical for the NEO ecosystem. A failure to secure the funds could lead to a catastrophic loss, while a prolonged public battle could permanently damage investor confidence in a project that was once a top-10 cryptocurrency.
This article is for informational purposes only and does not constitute investment advice.
