Is a $25 million refund clause in a major DeFi project’s funding round a sign of investor caution or standard practice?
Berachain Investment Dispute Unfolds
Berachain, a blockchain project focused on decentralized finance (DeFi), has publicly contested the portrayal of a refund agreement involving one of its key Series B investors. The disagreement centers on a side letter that reportedly grants Brevan Howard’s crypto fund, Nova Digital, the option to recoup its $25 million investment under specific conditions following Berachain’s token generation event (TGE).
Details of the Reported Refund Agreement
A recent report highlighted a side letter signed by Berachain’s general counsel, Jonathan Ip, and Nova Digital director, Carol Reynolds. This document outlines a one-year window for Nova to seek a refund of “some or all” of its investment, starting from Berachain’s TGE on February 6, 2025. The provision was tied to the April 2024 Series B round, where Nova co-led the investment through its Abu Dhabi office. Key elements of the agreement include:
- Refund Trigger: Applicable if Berachain fails to achieve TGE and token listing, rendering the locked BERA tokens ineligible for Nova’s liquid investment strategy.
- Duration: Extends until February 6, 2026.
- Additional Commitments: Nova agreed to provide liquidity on the Berachain network post-launch, alongside holding both locked BERA from the round and open-market purchases.
The report suggested this arrangement was unique, potentially indicating special treatment for the investor. However, Berachain’s founder emphasized that it aligns with broader commercial terms.
Founder's Clarification on Investment Terms
Smokey The Bera, Berachain’s anonymous founder, described the report as “inaccurate and incomplete” in a public statement. They clarified that Nova participated in the Series B on the same paperwork as all other investors, approaching Berachain months prior to lead the round via its liquid-only vehicle.
"Brevan Howard co-led our Series B a year ago, out of their Abu Dhabi office, via Nova, a new liquid-only vehicle on the same terms as all other investors," Smokey stated.
Smokey further explained that Nova requested the side letter as a safeguard against a failed TGE scenario. In exchange, Nova committed to enhanced liquidity provision, which became feasible only after launch. The founder noted that such provisions have precedent and were not intended to close the deal with an otherwise uninterested party or mitigate post-launch losses. Nova remains one of Berachain’s largest tokenholders, having increased its BERA exposure over time despite challenging market conditions for altcoins. Smokey highlighted Nova’s role as a liquidity provider, underscoring ongoing alignment with the project.
Market Context and BERA Token Performance
Berachain’s Series B round in April 2024 attracted significant venture interest amid a rebound in crypto investments. The project aims to enable sub-second transactions, positioning it in the race for real-time blockchains. As of November 25, 2025, the BERA token trades at $1.05, reflecting a 3.2% daily increase. However, it has declined 93% from its all-time high of $14.83, reached shortly after the February 2025 launch. This performance occurs in a broader altcoin market described as harsh, with limited liquidity and volatility. No uncertainties were flagged in the core details of the dispute or token metrics, though the full scope of “additional commercial arrangements” remains partially undisclosed. In the evolving DeFi landscape, where investor protections balance innovation risks, how might clearer communication of such terms influence participation in future blockchain funding rounds?
