Berachain Under Scrutiny: Leaked Documents Uncover “Risk-Free” Investment Agreement

Berachain is currently under investigation after leaked documents revealed a funding deal that granted institutional investor Brevan Howard special advantages over other investors. This deal includes a unique refund clause for Nova Digital, which could allow them to reclaim their full $25 million investment.

Key Takeaways

Nova Digital has secured a secret refund right, enabling them to recover some or all of their $25 million investment by February 2026.
Two anonymous Series B investors are claiming they were not informed of Nova's refund clause, which could violate "Most Favored Nation" agreements.

Berachain Under Scrutiny: Leaked Documents Uncover "Risk-Free" Investment Agreement

Understanding the Controversial Deal

Berachain is facing increased scrutiny after Unchained's investigative reporting brought to light a contentious funding arrangement that offers Brevan Howard, an institutional investor, remarkable downside protection, while other investors remain vulnerable to market fluctuations.

Leaked documents have disclosed that Nova Digital, which is part of Brevan Howard’s crypto division, acquired a secret “refund right.” This clause enables them to recover some or all of their $25 million investment from the Series B round. The agreement, which is noted in a side letter dated March 5, 2024, remains active until February 6, 2026—one year after Berachain’s token generation event.

Berachain Price Trend

Investment Details That Raised Concerns

In the April 2024 Series B funding round, Nova invested $25 million at a price of $3 per BERA token, contributing to a total raised amount of $100 million at a valuation of $1.5 billion, alongside co-leader Framework Ventures.

Currently, BERA tokens are trading at around $1, reflecting a decrease of approximately 67% from the initial price at which Nova invested. Notably, while other co-investors, including Framework Ventures, are incurring paper losses exceeding $50 million, Nova retains the option to request a full refund within five business days.

This arrangement operates similarly to a put option. If the value of BERA increases, Nova stands to benefit, but if it drops— as it has—they can exit without losses. To trigger this protective measure, Nova needed to deposit $5 million into a Berachain wallet within the first 30 days of the launch, though there is uncertainty surrounding the confirmation of this deposit.

Concerns Raised by Anonymous Investors

Two investors from the Series B round informed Unchained that they were unaware of the special terms given to Nova Digital. This situation raises critical questions regarding “Most Favored Nation” clauses, which usually mandate transparency when one investor is granted better terms than others.

Unchained consulted four crypto lawyers, who highlighted that such refund provisions are considered “extremely rare” in token deals, with standard procedures only allowing for refunds if a project does not launch at all—not merely due to underperformance in token value.

Berachain's Defense

Smokey The Bera, a pseudonymous co-founder of Berachain, has defended the arrangement on social media platform X, asserting that the refund clause was implemented to meet the compliance needs of Brevan Howard's liquid-only vehicle based in Abu Dhabi. He insisted that this clause is only relevant if the token generation fails or if exchanges do not accept listings—not based on price performance.

Smokey also pointed out that Nova has since increased its holdings of BERA tokens, positioning themselves as “one of the largest investors and liquidity providers” within the ecosystem.

Implications of the Situation

This incident sheds light on the often unclear nature of crypto fundraising practices, where side agreements can create significantly different risk profiles for investors involved in the same funding round. As the February 2026 deadline for Nova's refund option approaches, attention will be on whether they decide to utilize their escape clause.