Neo's Power Rule Under Fire: Co-Founders Battle Over Treasury Custody and Governance Transparency

A heated confrontation between Neo co-founders Erik Zhang and Da Hongfei has exposed fundamental fractures in the project’s governance model and asset management practices. The dispute, which crystallized on December 31, 2025, centers on three interconnected issues: treasury control mechanisms, financial reporting standards, and the distribution of decision-making authority within the Neo ecosystem.

Financial Transparency Becomes the Flashpoint

Erik Zhang publicly challenged Da Hongfei to deliver comprehensive financial disclosures covering Neo Foundation assets, holdings, and expenditure patterns. Zhang’s criticism cuts deeper than a simple accounting request—he frames the current opacity as a governance crisis that prevents community members from evaluating how their project’s resources are being deployed.

Zhang characterized the Foundation’s financial posture as opaque, contrasting earlier commitments to formal public reporting with the actual absence of such documentation. His statement highlights a critical gap between promise and execution, one that undermines the foundational principle of accountability in decentralized projects.

Notably, Zhang referenced a recent December agreement under which Da would reallocate his focus toward NeoX and SpoonOS initiatives beginning January 2026, effectively stepping back from Neo mainnet governance. This arrangement itself signals underlying tensions about role separation and operational focus.

The Custody Concentration Problem

Da Hongfei’s counter-response reveals a starkly different picture of power distribution. He argues that Zhang maintains operational control over the majority of Neo’s treasury assets and exercises decisive influence over consensus node voting mechanisms. From Da’s perspective, this concentration represents a structural governance vulnerability rather than an acceptable arrangement.

Da’s core argument challenges the entire power rule governing asset custody: a single individual holding unchecked authority over token reserves violates the decentralization principles that blockchain projects claim to uphold. He positions his push for multisignature wallet structures—where multiple parties must approve significant transactions—not as a power grab but as a necessary evolution toward genuine distributed governance.

Da points to prolonged delays in transitioning NEO and GAS tokens from personal custody to Neo Foundation multisig protocols. According to his account, Zhang has repeatedly deferred this transition, most recently tying completion to the broader N3 migration initiative. Da emphasizes that his proposed solution would retain Zhang as a key signatory, preserving his influence while distributing veto power.

Competing Visions for Project Leadership

The dispute extends beyond financial mechanics into philosophical disagreements about project governance. Zhang suggests that during periods when he stepped back from active leadership, Da developed parallel blockchain initiatives that potentially conflicted with Neo’s strategic focus. Zhang characterizes this as evidence of misaligned incentives within the leadership structure.

Da responds by reaffirming his commitment to Neo as his foundational creation. He positions the governance conflict not as a power struggle but as a structural necessity—one that protects the project from individual overreach, regardless of the founder’s intentions. He indicates the Neo Foundation will maintain strict fiscal oversight given current resource constraints and will pursue treasury custody reforms through all available mechanisms.

Community Pressure and Path Forward

The public airing of this dispute has catalyzed significant community concern. Neo holders are increasingly vocal about demanding transparent financial reporting and articulated governance frameworks. The conflict risks consuming organizational energy during a market period when Neo requires focused development attention.

As 2026 approaches, the community awaits concrete steps: comprehensive financial disclosures, a formal governance restructuring plan, and clear demarcation of leadership responsibilities. The resolution of these tensions will likely determine whether Neo can maintain project momentum or whether internal disputes continue fragmenting focus and eroding stakeholder confidence.

The dispute fundamentally asks whether Neo can implement the power rule necessary for sustainable decentralized governance—or whether the project will struggle with the same centralization vulnerabilities that have challenged other blockchain initiatives.