A significant altercation between NEO’s two co-founders, Da Hongfei and Erik Zhang, has captured the cryptocurrency world’s attention. The NEO platform, launched in 2014 and a noteworthy player in the Chinese blockchain landscape, is now at a crossroads due to governance and asset management disputes. At the heart of the controversy is the handling of the foundation’s assets, which have been managed through personal accounts.
Who Controls NEO’s Wealth?
Da Hongfei has raised alarms over a large portion of NEO and GAS tokens being controlled by Erik Zhang. For years, these assets, making up around 85% of the foundation’s native cryptocurrency reserves and valued at up to $250 million, have been held in Zhang’s personal wallet without corporate oversight. Notably, this amount surpasses NEO’s current market cap of $197 million.
Conversely, other NEO treasury holdings like Bitcoin, Ether, and stablecoins sit with NGD, under Da’s supervision. The value of these assets has significantly increased, now exceeding $200 million, largely due to early strategic investments. This division of assets has created a dichotomy in management approaches between the two co-founders.
How Can This Internal Dispute Be Settled?
Social media platforms have become a battleground for Zhang and Da, unfurling their disputes publicly since December. While Zhang accuses Da of past opacity in asset dealings, Da dismisses such claims as groundless.
Da Hongfei, addressing the corruption allegations, stated, “These are very harsh and baseless accusations. There is no corruption or inappropriate use of funds.”
A recent reconciliation attempt in Hong Kong between the co-founders did not bear fruit. Da proposed shifting the Neo Foundation’s base to the Cayman Islands, alongside a management shake-up and redistributing $66 million worth of crypto to token holders. Zhang, however, disagrees, opting instead for stronger adherence to Singapore’s jurisdiction and a detailed review of the financial management to date, insisting on transparency in community asset management.
The dispute revolves primarily around the governance of NEO’s treasury. For Da’s vision to be realized, Zhang must agree to migrate his NEO and GAS tokens into a shared, secure multi-signature wallet. Yet, Zhang’s willingness to collaborate remains uncertain.
Da emphasized, “We must sacrifice our individual control for the sake of restructuring. I am ready; I’m just unsure whether Erik is as well.”
Community feedback is deemed vital in determining future steps, although immediate actions should include the transition to a more protected multi-signature system to boost security and investor confidence.
Current fragmentation in asset control has increased anxiety among investors and the community alike, especially as NEO’s market valuation has plummeted by 98% since its peak in 2018.
Da anticipates that, with Zhang’s agreement, a new governance setup could be operational within a few months. Yet, Zhang has remained publicly silent on his stance regarding the proposed restructuring.
