Berachain says refund rights for $25 million investor were compliance requirement, not special privilege

Berachain has disputed a report characterizing a side agreement that gave Brevan Howard’s Nova Digital the right to reclaim its $25 million Series B investment within one year of the blockchain’s token launch.

The arrangement, disclosed in documents published by Unchained, has sparked debate about preferential treatment and transparency after Berachain founder Smokey The Bera said the refund clause was a compliance requirement for Nova’s liquid fund structure, not a special privilege unavailable to other investors.

Dispute Over How the Berachain Refund Deal Was Presented

The controversy began when Unchained reported that Berachain granted Nova Digital, Brevan Howard’s crypto-focused fund, a one-year right to reclaim its full $25 million Series B investment—a right triggered after Berachain completed its token generation event (TGE) on Feb. 6, 2024. According to the report, the Berachain refund deal gave Nova a window extending to Feb. 6, 2026.

A side letter published by Unchained included signatures from Berachain general counsel Jonathan Ip and Nova director Carol Reynolds, outlining that Nova could retrieve “some or all” of its investment for “twelve months following” the TGE. The Berachain refund deal quickly became a focal point of debate due to its potentially precedent-setting implications for blockchain fundraising.

However, Berachain founder Smokey The Bera challenged the framework presented in the coverage. The founder insisted that the reporting surrounding the Berachain refund deal misrepresented how the investment terms were structured.

Smokey added that Brevan Howard co-led the round “on the same terms as all other investors,” rejecting suggestions that the Berachain refund deal offered Nova preferential access that other early-stage supporters did not receive.

Why Nova Requested Additional Protections

According to Smokey, Nova requested extra provisions because its fund structure required liquidity and regulatory clarity following Berachain’s TGE. Before token launch, Nova’s locked BERA tokens would not qualify as an eligible investment under its liquid strategy, prompting the Berachain refund deal to act as a safeguard—not a profit-protection mechanism.

Smokey said the refund clause was designed “to guard for a scenario in which Berachain failed to TGE and get listed.” This, they argued, integrated the Berachain refund deal into Nova’s compliance obligations rather than offering any special privilege.

They added that Nova entered “additional commercial arrangements, including an agreement to provide liquidity on the network, which was only possible upon launch.”

The founder emphasized that these commitments formed part of a broader commercial partnership, noting that Nova is not merely a passive investor but one of the largest tokenholders in the ecosystem. “They have increased their BERA exposure over time, despite running a liquid fund in a harsh alt environment,” — Smokey The Bera.

This layer of involvement added new context to the Berachain refund deal, illustrating Nova’s ongoing participation in supporting Berachain’s market operations.

HInvestor Reactions and Market Impact

The debate over the Berachain refund deal comes amid a challenging period for the project. Berachain’s token, BERA, has fallen 93% from its February peak of $14.83 and is currently trading near $1.05. The timing of the leaked Berachain refund deal raised speculation among traders about whether institutional pressure or structural risk prompted Nova to seek more flexible liquidity rights.

Berachain has denied that the Berachain refund deal was introduced to mitigate post-launch losses or reassure hesitant investors. Instead, it claims the arrangement has “precedent” in similar liquidity-constrained fund structures.

Brevan Howard did not respond to requests for comment, and the Berachain Foundation acknowledged receiving inquiries but has not yet issued a formal statement beyond Smokey’s posts on X.

Meanwhile, transparency advocates argue that the Berachain refund deal reveals a need for clearer industry standards regarding side letters, liquidity protections, and investor disclosures in blockchain fundraising rounds.

As the crypto market continues to mature, the Berachain refund deal underscores the tension between fund requirements, startup financing practices, and the expectations of community investors who often lack access to the same contractual protections.