A major dispute between the two co-founders of the NEO project has drawn widespread attention within the cryptocurrency industry. Founded in 2014 and renowned among blockchain initiatives originating from China, NEO enables the development of decentralized applications. The ongoing conflict between Da Hongfei and Erik Zhang, notably over governance and asset management, reached a boiling point as it became clear that the foundation’s assets were, for a long time, handled through personal wallets.
Hundreds of millions under personal authority
According to Da Hongfei, the majority of the foundation’s native tokens—NEO and GAS—have been stored in Erik Zhang’s personal wallet for years. These funds have remained under single-signature control, with no corporate oversight or multi-signature security systems in place. Da estimates that about 85% of the NEO and GAS reserves—currently worth between $200 million and $250 million—are managed solely by Zhang, a figure exceeding NEO’s current market capitalization of $197 million.
In contrast, NEO’s other treasury assets—including bitcoin, ether, stablecoins, and various fund investments—are managed by NGD, a division led by Da Hongfei. The early investments in BTC and ETH have appreciated significantly over recent years, pushing this segment beyond the $200 million mark. As a result, NEO’s treasury is now split: native tokens remain primarily with Zhang, while crypto funds fall under NGD’s management.
Internal rift surfaces publicly
The governance disagreement between Zhang and Da has become increasingly visible on social media and public forums since December. While Zhang has accused Da of inadequate transparency in past asset management, Da has firmly rebuffed the allegations as unfounded.
Da Hongfei, responding to claims of corruption and misconduct, stated, “These are very harsh and baseless accusations. There is no corruption or inappropriate use of funds.”
Amid this turmoil, the two co-founders attended a failed reconciliation meeting in Hong Kong. On April 9, Da Hongfei proposed a restructuring that included moving the Neo Foundation from Singapore to the Cayman Islands, both founders stepping away from management for two years, and distributing $66 million in crypto assets back to token holders. Zhang, in contrast, opposes the Cayman move, seeks to keep the foundation Singapore-based, and advocates a thorough review of past financial management, emphasizing greater transparency in handling community assets.
Critical step towards resolution
The core issue behind the dispute lies in how NEO’s treasury should be governed. For Da Hongfei’s restructuring plan to move forward, Zhang would have to transfer his personally-held NEO and GAS tokens into a secure multi-signature address. Da has affirmed his readiness for such a move, but it remains unclear whether Zhang intends to cooperate.
Highlighting the central reform, Da commented, “We must sacrifice our individual control for the sake of restructuring. I am ready; I’m just unsure whether Erik is as well.”
Da further stressed that community input will play a decisive role in shaping the outcome. Yet, the immediate priority is shifting assets from the single-signature wallet to a decentralized, multi-signature custody system to enhance security and trust.
With treasury assets currently divided between two individuals, investor and community anxiety has mounted. Notably, NEO’s market value has plunged by 98% since its all-time high in 2018.
Looking ahead, Da suggested that a new governance structure could be implemented within one to three months, provided Zhang cooperates. So far, Zhang has made no public statement regarding his stance on the proposal.
