Berachain under fire: Leaked documents reveal “risk-free” investment deal

Key Takeaways

What special terms did Brevan Howard secure in Berachain’s Series B?

Nova Digital obtained a secret refund right, allowing them to reclaim some or all of their $25 million investment until February 2026.

Why is this causing controversy among other Berachain investors?

Two anonymous Series B investors claim they were never informed about Nova’s refund clause, potentially violating “Most Favored Nation” provisions.

Berachain is facing mounting scrutiny after investigative reporting by Unchained exposed a controversial funding arrangement that gave institutional investor Brevan Howard unprecedented downside protection—while other investors remain fully exposed to market losses.

Leaked documents reveal that Nova Digital, Brevan Howard’s crypto division, secured a secret “refund right” allowing them to reclaim some or all of their $25 million Series B investment. 

The clause, buried in a side letter dated 5 March 2024, remains active until 6 February 2026—exactly one year after Berachain’s token generation event.

The deal that raised eyebrows

Nova invested $25 million at $3 per BERA token during the April 2024 Series B round, which raised $100 million at a valuation of $1.5 billion. Framework Ventures co-led the round alongside Nova.

Here’s the kicker: BERA now trades around $1, down approximately 67% from Nova’s entry price.

Source: TradingView

While co-investors like Framework Ventures face paper losses exceeding $50 million, Nova can request a full refund within five business days.

The arrangement functions like a put option. If BERA rallies, Nova captures the upside. If it crashes—as it has—they walk away whole. 

To activate this safety net, Nova needed to deposit $5 million into a Berachain wallet within 30 days of launch. However, confirmation of this deposit remains unclear.

Anonymous investors cry foul

Two Series B investors told Unchained that they were unaware of Nova’s special terms.

This raises serious questions about “Most Favored Nation” clauses, which typically require disclosure when one investor receives better terms than others.

Four crypto lawyers interviewed by Unchained called such refund provisions “extremely rare” in token deals. 

Standard practice only allows refunds if projects completely fail to launch—not merely because tokens underperform.

Berachain pushes back

Pseudonymous co-founder Smokey The Bera defended the arrangement on X, claiming it addressed compliance requirements for Brevan Howard’s Abu Dhabi-based “liquid-only vehicle.” 

He insisted the clause only applied if token generation failed or exchanges rejected listings—not for price performance.

Smokey emphasized that Nova has increased its BERA holdings since launch, positioning them as “one of the largest investors and liquidity providers.”

What’s at Stake

This controversy exposes the often-opaque world of crypto fundraising, where side letters can create vastly different risk profiles within the same investment round. 

With BERA’s February 2026 refund deadline approaching, all eyes remain on whether Nova will exercise its get-out-of-jail-free card.