Berachain Founder Disputes $25M Refund Allegations

In a recent statement, Smokey the Bera, the anonymous co-founder of Berachain, challenged a report alleging that lead investor Brevan Howard’s Nova Digital fund has a unique $25 million refund right on its Series B investment. Smokey termed the coverage "incomplete and inaccurate," raising concerns about the transparency and funding practices within the blockchain project.

Key Takeaways

Smokey the Bera, co-founder of Berachain, has criticized a report about a $25 million refund right for Brevan Howard’s Nova Digital fund, describing it as misleading.
The arrangement allows Nova to reclaim its investment until February 6, 2026, which raises concerns about typical funding practices in token investments.
Many other investors in Berachain's Series B were reportedly unaware of the refund rights secured by Nova Digital.
Berachain has faced significant market challenges, as the price of its BERA token has fallen drastically since its peak.

Berachain Founder Calls $25M Refund Report "Inaccurate and Incomplete"

Disputing the Refund Mechanism

The anonymous co-founder of Berachain, Smokey the Bera, is questioning a report that claims Brevan Howard’s Nova Digital fund has secured a $25 million refund right on its Series B investment. He describes this coverage as both incomplete and inaccurate, heightening concerns regarding the blockchain's funding practices and overall transparency. As of now, the BERA token is trading at $1.02, significantly lower than Nova Digital’s entry price of $3.

Documents acquired by Unchained suggest that Brevan Howard’s Nova fund received a rare refund clause post-launch, which allows it to reclaim its full investment until February 6, 2026—the date falling one year post Berachain's token generation event.

Image related to the refund mechanism

According to four legal experts focusing on crypto, such refund arrangements are quite rare in token fundraising. Typically, refund rights are only activated if projects fail to launch tokens entirely.

Transparency Concerns Arise

The specific refund mechanism required Nova Digital to deposit $5 million into a Berachain wallet within 30 days of the token's launch on February 6, 2025, to activate this option. This arrangement protects Brevan’s investment while allowing potential for profit, contrasting with traditional venture investments where capital remains at risk irrespective of performance.

Gabriel Shapiro, co-founder of MetaLeX Labs, which has participated in over 50 token fundraising events, remarked that he had never seen a post-token generation event (TGE) refund right in any funding round.

Two Series B investors expressed to Unchained their surprise that another investor had secured such refund rights. Aaron Brogan from Brogan Law pointed out that this clause likely activates standard Most Favored Nation rights, which ensure early investors access to terms offered to later backers. This setup could potentially violate the rights of at least one other Series B investor, as per insider knowledge.

Berachain's Defense of Its Agreements

In a detailed statement on X, Smokey the Bera defended the refund arrangement, asserting that Brevan Howard remains one of the prominent tokenholders in Berachain. He explained that Nova’s compliance team required certain terms to cater to instances where locked BERA acquired through financing might not fit into the fund’s liquid investment strategy.

“Their investments involve several complex commercial agreements, but they participated under the same terms as other investors in the Series B fundraise,” Smokey noted, emphasizing Nova's commitment to providing network liquidity post-launch. He criticized Unchained’s report as incomplete and hinted at contributions from disgruntled former employees.

The foundation insists that no other purchasers in the Series B received MFN clauses, contradicting claims from the article. In an effort to quell speculation about insider selling, Smokey revealed that he had incurred substantial losses on liquid BERA purchases.

Market Challenges and Ongoing Recovery Plans

The value of BERA has plummeted over 90% from its previous high of $11, currently trading around $1.02, which puts major investors in a precarious position.

Image showing market decline

By the end of Q2 2025, Framework Ventures, which co-led the Series B alongside Brevan Howard, held 21,145,476 BERA tokens purchased for about $72.4 million, indicating paper losses exceeding $50.8 million at current prices.

Furthermore, the network has seen approximately $367 million in outflows to competing blockchains throughout 2025, based on data from Artemis.

Another relevant image

Most recently, on November 3, validators paused operations after discovering a vulnerability in the Balancer protocol that exposed $12.8 million in funds. However, services resumed within 24 hours, and the funds were retrieved by a white-hat hacker.

In October, Berachain unveiled a potential recovery initiative when Greenlane Holdings, a company specializing in smoking accessories, disclosed a $110 million private placement aimed at acquiring BERA for a digital asset treasury. This effort is supported by notable firms, including Polychain, Blockchain.com, and Kraken, with SEC filings indicating that Papa Bear will serve as an advisor.

Currently, Nova Digital is being separated from Brevan Howard, due to differing strategies and risk tolerance. Once the spin-out is finalized, Brevan will have no further engagements with Berachain.