The internal schism at NEO, once hailed as the "Ethereum of China," has escalated into a public governance crisis as its two primary architects propose radically different futures for the project’s multi-million dollar treasury. At the heart of the dispute is a financial structure that deviates significantly from modern blockchain standards: a massive portion of the project’s assets remains under the single-signature control of a single individual, a setup that co-founder Da Hongfei now characterizes as an unsustainable risk to the ecosystem’s survival.
For nearly a decade, NEO has operated under a governance model that concentrated power within its founding duo. However, the release of the project’s Fiscal Year 2025 financial report—the first comprehensive disclosure since 2020—has pulled back the curtain on a treasury worth approximately $460 million. This figure is particularly striking when contrasted with NEO’s current market capitalization of $197 million, suggesting that the project is currently trading at a significant discount to its liquid assets. The discord between Da Hongfei and Erik Zhang has now reached a stalemate, with each founder holding leverage over a different half of the project’s wealth.
The Architecture of a Divided Treasury
According to Da Hongfei, the NEO treasury is split into two distinct silos. The first consists of the project’s native NEO and GAS tokens, which are currently valued between $200 million and $250 million. These assets are allegedly held in personal wallets controlled exclusively by Erik Zhang via single-signature access. This means that a single set of private keys, held by one person, governs the majority of the circulating supply’s reserve.
The second silo is managed by Neo Global Development (NGD), the operational arm overseen by Da. This portion of the treasury has grown to over $200 million and includes a diversified portfolio of 1,100 BTC, various Ethereum holdings, stablecoins, and venture capital investments, including an unliquidated stake in the global exchange Binance. These assets were largely accumulated through early-stage investment returns and the appreciation of "blue-chip" cryptocurrencies held since the project’s early years.
The current conflict is framed by Da as a "mutual disarmament" problem. He argues that the project cannot move forward until both founders relinquish personal control. Under his proposed restructuring, NGD would cede control of its BTC and stablecoin reserves to a new governance entity, while Zhang would be required to transfer the native NEO and GAS tokens to a multi-signature (multi-sig) address governed by a constitutional framework.
A Chronology of the Governance Breakdown
The friction between the two founders did not emerge in a vacuum. It is the culmination of months of deteriorating communication and divergent strategic visions.
- 2014–2017: Founded as Antshares, the project rebranded to NEO in 2017, experiencing a meteoric rise during the initial coin offering (ICO) boom. At its peak in early 2018, the NEO token traded above $190.
- 2020–2024: Following the 2020 financial report, the project entered a period of relative silence regarding its internal asset management. While technical development continued on the Neo N3 mainnet, the governance structure remained static.
- December 2025: Public disputes between Da and Zhang began to surface on social media platforms, with Zhang raising concerns about the management of non-token assets and Da advocating for a more "professionalized" corporate structure.
- Early 2026: A mediation attempt took place in Hong Kong, aimed at reconciling the founders’ differences. The effort was ultimately unsuccessful, leading to the publication of rival proposals.
- April 9, 2026: Da Hongfei published a formal restructuring proposal on GitHub, calling for the dissolution of the current founder-led board in favor of independent oversight.
- April 15, 2026: Erik Zhang responded with a counter-proposal that prioritized internal investigations over structural migration.
Da Hongfei’s Vision: The Cayman Transition and Independent Oversight
Da Hongfei’s proposal, detailed in GitHub Issue #4526, centers on "institutionalizing" NEO to move beyond its "start-up" phase. The cornerstone of this plan is the redomiciling of the Neo Foundation from Singapore to the Cayman Islands. Da argues that the Cayman Islands offer a more flexible and robust legal framework for decentralized autonomous organizations (DAOs) and international crypto foundations.
Beyond the change in jurisdiction, Da’s plan demands a radical shift in leadership. He proposes a five-member independent board where neither he nor Zhang would be permitted to serve for at least 24 months. This "cooling-off period" is intended to ensure that the new board can operate without the influence of the original founders. Furthermore, the plan includes a significant redistribution of assets: approximately 26 million NEO and 40 million GAS would be returned to token holders or allocated to community-driven initiatives to decentralize the voting power of the network.
"The fundamental change is that both Eric and I need to sacrifice our individual control over assets," Da stated in a recent interview. "NGD will lose its control over the BTC and stablecoins, and Eric will lose his personal control of the NEO tokens. This is the only way to ensure the project’s longevity."
Erik Zhang’s Counter-Proposal: Accountability and Retention
Erik Zhang’s response (GitHub Issue #4531) presents a starkly different set of priorities. Zhang has rejected the move to the Cayman Islands, advocating instead for the Foundation to remain in Singapore, a jurisdiction known for its rigorous but clear regulatory environment under the Monetary Authority of Singapore (MAS).
More significantly, Zhang’s proposal includes a mandate for a formal, independent investigation into the historical management of NEO’s assets. His proposal suggests the need for provisions to address potential corruption, improper asset transfers, and the alleged concealment of public assets. Zhang has signaled that he is unwilling to step down from the board, suggesting that his presence is necessary to ensure accountability and to oversee the investigation into NGD’s past activities.
Zhang’s camp has hinted that the push for a Cayman Islands migration might be an attempt to evade the stricter reporting and oversight requirements of Singapore. By demanding an audit before any restructuring takes place, Zhang has effectively blocked Da’s timeline, creating a "checkmate" scenario where no assets can be moved until the allegations of mismanagement are resolved.
Financial Disparity and Market Implications
The financial data revealed in the FY2025 report has left many market analysts perplexed. With a treasury worth $460 million and a market cap of $197 million, NEO is effectively "worth more dead than alive." This disparity is often seen in traditional finance when a company’s cash on hand exceeds its stock market valuation, usually indicating a total loss of investor confidence in management.
The native NEO token has declined by approximately 98% from its 2018 all-time high. Observers note that while the treasury has flourished—largely due to passive gains from Bitcoin and Ethereum—the core NEO ecosystem has struggled to maintain its once-dominant position in the smart contract platform market. The "Chinese Ethereum" moniker has largely faded as newer Layer 1 and Layer 2 solutions have captured developer mindshare and liquidity.
The current deadlock poses a significant risk to the GAS token, which is used for utility on the network. If the founders cannot agree on a path forward, the 40 million GAS tokens currently held in the treasury remain effectively frozen, preventing their use for ecosystem incentives or developer grants.
Broader Impact on the Blockchain Industry
The NEO crisis serves as a cautionary tale for the "founder-led" model of blockchain governance. In the early days of the industry, it was common for founders to hold large swaths of tokens in personal wallets to facilitate rapid decision-making. However, as projects mature into multi-hundred-million-dollar entities, these "single-sig" arrangements become significant points of failure.
The dispute also highlights the growing tension between different regulatory jurisdictions. The choice between Singapore and the Cayman Islands is not merely a geographic one; it represents a choice between a high-compliance, transparent environment and a more private, flexible one. For a project with NEO’s history and scale, the outcome of this jurisdictional battle will likely set a precedent for other "legacy" blockchain projects facing similar governance transitions.
Community sentiment remains deeply divided. On GitHub and various social media channels, some token holders support Da’s plan as the only viable way to modernize the project and unlock the value of the treasury. Others side with Zhang, arguing that a full audit is a prerequisite for any structural change, fearing that a move to the Caymans could permanently obscure the project’s financial history.
The Path Forward: Community Intervention?
As of mid-April 2026, the two founders are reportedly no longer speaking productively. Da Hongfei has committed to a one-to-three month timeline for his restructuring plan, but he admitted that the success of the most critical steps—transferring the single-sig assets—depends entirely on Zhang’s cooperation.
When asked about the possibility of Zhang refusing to comply, Da’s response was somber. "If there is one person holding around half of a crypto-native token and not willing to hand it over to a multi-sig, constitutional governance, then the answer should come from the community itself."
This statement has sparked speculation about a potential "user-activated hard fork" or a community-led migration to a new contract that would effectively nullify the tokens held by the founders. However, such a move would be technically complex and could further damage the project’s reputation. For now, the NEO ecosystem remains in a state of suspended animation, its massive treasury a source of both immense potential and paralyzing conflict.
