Overview
A single individual holds the keys to an estimated $200 million in crypto assets, creating a critical single point of failure for the NEO project. This concentration of wealth, controlled by co-founder Erik Zhang, has become the flashpoint in a bitter governance dispute between Zhang and his co-founder, Da Hongfei. The situation highlights a fundamental structural risk: the project’s core assets are not protected by modern institutional safeguards, leaving the future of the ecosystem highly vulnerable.
For years, the management of NEO’s treasury operated outside the standard protocols of major financial institutions. Hundreds of millions of dollars in crypto were managed through personal wallets with minimal formal oversight or robust security measures. Da Hongfei estimates that Zhang controls approximately 85% of the native NEO and GAS tokens through a single signature, a setup that experts consider dangerously exposed. This single-signature control means that the entire value of the assets—estimated between $200 million and $250 million—rests on one person’s access and intent.
The dispute has escalated into a full-blown corporate and technical battle, producing two diametrically opposed restructuring proposals. The conflict is not merely about who runs the project; it is about the fundamental architecture of its governance, the legal jurisdiction of its foundation, and who holds accountability for past asset management decisions.
The Danger of Single-Signature Control
The Danger of Single-Signature Control
The core issue facing NEO is the dangerous lack of institutional safeguards surrounding its most valuable assets. The control of the native NEO and GAS tokens by Zhang via a single private key represents a profound operational risk. In modern decentralized finance (DeFi) and institutional crypto management, assets of this magnitude are almost universally protected by multi-signature (multi-sig) wallets, which require multiple independent parties to approve any transaction.
The absence of multi-sig protection means that the assets are susceptible to both internal misuse and external threats. If the single private key were compromised, or if the holder were incapacitated or unwilling to cooperate, the entire $200 million+ pool of tokens could be locked or lost. Da Hongfei’s insistence that the structure must change reflects a deep understanding of modern treasury management best practices. The reliance on personal control, rather than a distributed, committee-based governance model, is an archaic setup for a multi-million dollar crypto treasury.
Furthermore, the scope of the assets under dispute is vast. While the project’s current market capitalization stands at roughly $197 million, the treasury itself holds an estimated $460 million in assets. This means the liquid assets—including BTC, ETH, stablecoins, and fund-of-fund investments—are significantly larger than the circulating market value of the token, increasing the pressure and the stakes involved in resolving the governance deadlock.
Two Co-Founders, Two Futures
The dispute between Da Hongfei and Erik Zhang has crystallized into two conflicting blueprints for the future of the NEO Foundation. These proposals are not minor adjustments; they represent fundamentally different visions for the project’s legal structure, governance mechanism, and accountability framework.
Da Hongfei’s proposal, published on GitHub, advocates for a radical overhaul. It mandates redomiciling the Neo Foundation from Singapore to the Cayman Islands, a move that signals a significant shift in legal jurisdiction and tax framework. Crucially, it proposes replacing the current two-founder governance structure with an independent five-member board. Furthermore, this board would be barred from involvement for a period of 24 months, effectively creating a cooling-off period and introducing external oversight. The proposal also includes a mechanism to redistribute a substantial portion of the native tokens to the general tokenholder base, aiming to broaden community ownership.
Zhang’s counter-proposal maintains the status quo on several fronts. He argues for keeping the Foundation domiciled in Singapore and, most pointedly, insists on remaining a member of the board. More significantly, his plan introduces provisions for a formal investigation into the historical management of assets. This call for an audit suggests a deep-seated concern regarding past operational transparency and potential mismanagement, a claim that Da Hongfei has dismissed as unfounded.
The Financial Disconnect and Accountability
The financial details surrounding the NEO treasury reveal a stark disconnect between the project’s current market valuation and the actual assets held. The treasury's reported value of $460 million dwarfs the $197 million market cap, a ratio that demands rigorous transparency and institutional-grade management.
The financial report for NEO’s fiscal year 2025, the first comprehensive disclosure since 2020, provided details on the diverse holdings. These assets included over 1,100 BTC, more than $100 million in stablecoins, and various venture investments, including an unliquidated stake in Binance. This diversification—holding everything from Bitcoin to private equity stakes—is characteristic of a sophisticated, but currently unregulated, crypto fund.
The assets are currently segregated into two distinct pools. The first pool, comprising the native NEO and GAS tokens, remains under Zhang's single-signature control. The second pool, which includes the stablecoins, BTC, ETH, and fund-of-fund investments, is managed by NGD, the entity associated with Da Hongfei. The growth of the NGD-managed assets, particularly the non-token holdings, to over $200 million, is largely attributed to early-stage investment returns and the appreciation of its core crypto holdings. This division of assets, while functional, only exacerbates the governance problem by creating two separate, potentially conflicting, centers of financial power.
