Berachain’s anonymous co-founder, Smokey the Bera, has disputed investigative reporting revealing that lead investor Brevan Howard’s Nova Digital fund secured a unique $25 million refund right on its Series B investment, calling the coverage incomplete and inaccurate.
The disclosure has intensified scrutiny over the layer-1 blockchain’s funding practices and transparency standards, particularly as the BERA token trades at $1.02, roughly two-thirds below Nova Digital’s $3 entry price.
Documents obtained by Unchained show Brevan Howard’s Nova fund received an unusual post-launch refund clause allowing it to reclaim its entire $25 million investment until February 6, 2026, one year after Berachain’s token generation event.
Source: UnchainedFour crypto-focused attorneys told Unchained that such arrangements are highly unusual in token fundraises, where refund rights typically only trigger if projects fail to launch tokens at all.
Unusual Terms Raise Transparency Questions
The refund mechanism required Nova Digital to deposit $5 million into a Berachain wallet within 30 days of the token launch on February 6, 2025, to activate the option.
This structure eliminated downside risk for Brevan’s fund while preserving upside potential, which is quite different from the traditional venture investments, where capital remains at risk regardless of performance.
MetaLeX Labs co-founder Gabriel Shapiro, who has worked on over 50 token fundraising deals, said in the report that he had never encountered a post-TGE refund right in any round.
Two investors in Berachain’s Series B told Unchained they were not informed that another participant had secured refund rights.
Aaron Brogan, founder of Brogan Law, noted such a clause likely triggers standard Most Favored Nation provisions that guarantee early investors access to terms offered to later backers.
The arrangement could violate MFN rights held by at least one other Berachain investor, according to sources familiar with the matter.
Foundation Defends Commercial Agreements
Smokey the Bera defended the arrangement in a lengthy statement posted on X, asserting that Brevan Howard remains one of Berachain’s largest tokenholders.
He explained that Nova’s compliance team required provisions to address scenarios in which locked BERA purchased through the financing might not qualify as an eligible investment under the fund’s liquid strategy.
“Their investments involve several complex commercial agreements, but they participated in the series B fundraise on the same paperwork as all investors,” Smokey wrote, adding that Nova committed to providing liquidity on the network following launch.
He characterized Unchained’s reporting as incomplete and suggested disgruntled former employees contributed to the story.
The foundation maintains that no other Series B purchasers received MFN clauses despite claims in the article.
When being asked, Smokey disclosed being down by seven figures on liquid BERA purchases, countering speculation about insider selling.
Market Struggles and Recovery Efforts
BERA’s price has collapsed by over 90% from its $11 all-time high to current levels around $1.02, leaving major investors significantly underwater.
Source: CoinMarketCapFramework Ventures, which co-led the Series B alongside Brevan Howard’s Nova fund, held 21,145,476 BERA tokens by the end of Q2 2025, acquired at roughly $72.4 million, representing paper losses exceeding $50.8 million at current prices.
The network has experienced approximately $367 million in net outflows to competing blockchains in 2025, according to Artemis data.
Most recently, validators halted the chain on November 3 after a Balancer protocol vulnerability threatened $12.8 million in funds.
However, operations resumed within 24 hours, and the assets were recovered from a white-hat hacker.
Berachain announced a potential turnaround initiative in October when smoking accessories company Greenlane Holdings revealed a $110 million private placement to acquire BERA for a digital asset treasury.
The DAT drew backing from Polychain, Blockchain.com, Kraken, North Rock Digital, CitizenX, and dao5, with Papa Bear set to serve as company advisor according to SEC filings.
Currently, Nova Digital is being spun out from Brevan Howard due to differences in risk tolerance and strategy.
The fund will operate independently, and Brevan will have no involvement with Berachain once the separation is complete.
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