- Berachain faces pressure as a rare refund clause for Nova Digital raises concern and brings new focus to investor rights.
- The BERA token trades far below entry levels and this fuels questions about fairness and the structure of Series B terms.
- Network outflows and halted operations add strain as investors monitor losses and track the impact of unusual funding rules.
Berachain’s anonymous co-founder, Smokey the Bera, has challenged new reporting that revealed a $25 million refund right granted to Brevan Howard’s Nova Digital fund during the project’s Series B round. The disclosure has added pressure on the layer-1 network as the BERA token trades at $1.02. The price sits nearly two-thirds below Nova Digital’s $3 entry point.
Documents show the fund secured a post-launch refund option that lasts until February 6, 2026. The clause became valid after Berachain generated its token on February 6, 2025. Attorneys familiar with token fundraising said such terms rarely appear in crypto deals. They noted that refund rights usually activate only when a token fails to launch.
Refund Structure Raises Fairness and Transparency Issues
Nova Digital needed to deposit $5 million into a Berachain wallet within 30 days of launch to activate the option. This structure removed downside risk for the fund and maintained its upside exposure. The setup differs from standard venture funding, where capital usually stays at risk.
Industry experts said they had never seen a post-launch refund right in similar rounds. Two Series B investors indicated they were unaware that another participant secured special protections. Legal analysts noted that such terms often trigger Most Favored Nation provisions. These provisions ensure early investors receive the same terms offered to later participants.
Sources familiar with the round said the arrangement could conflict with MFN rights held by at least one other investor. The report has renewed debate over transparency within Berachain’s fundraising process.
Foundation Responds as Investors Track Losses
Berachain’s foundation defended the deal and stated that Nova Digital remained a major tokenholder. The foundation said Nova required protections due to concerns linked to liquid investment rules. It also insisted that all Series B buyers used the same paperwork. It rejected claims that other investors held MFN clauses.
The foundation said Smokey bought liquid BERA during the year and recorded seven-figure paper losses. Framework Ventures also faced significant unrealized losses. The firm held more than 21 million BERA by the end of Q2 2025. Those tokens carried a cost of $72.4 million. Their value dropped by over $50 million at current prices.
Network Faces Technical Pressure and New Treasury Proposal
The network saw $367 million in net outflows in 2025 as users moved liquidity to other chains. Validators halted the chain on November 3 after a Balancer protocol issue placed $12.8 million at risk. Operations resumed within a day after a white-hat recovered the funds.
In October, Greenlane Holdings announced a $110 million plan to purchase BERA for a digital asset treasury. Several major crypto firms backed the effort. Meanwhile, Nova Digital is separating from Brevan Howard and will operate independently.
