Berachain is facing mounting criticism after revelations that one of its Series B investors secured a secret refund right worth $25 million—an arrangement that shields the firm from downside risk while leaving retail investors and even other backers exposed. The discovery has intensified concerns about transparency in crypto funding rounds, especially as the project’s token struggles and activity across its ecosystem continue to fade.
The arrangement came to light through reporting by Unchained journalist Jack Kubinec, who found that Brevan Howard’s Nova Digital fund negotiated a one-year window to reclaim its entire $25 million investment following Berachain’s token generation event. The clause, which expires on February 6, 2026, gives Nova Digital the option to walk away if the BERA token’s price collapses—but still keep the upside if it performs well.
According to lawyers who reviewed the documents, the structure effectively eliminates Nova Digital’s risk exposure. Two additional Series B investors told Unchained they had no knowledge of the special terms, raising questions about fairness and whether Berachain withheld material details from other stakeholders. One lawyer noted that typical refund rights only apply when a project fails to launch its token, not when the token’s price drops.
The refund right was documented in a side letter titled “Nova Side Letter,” an uncommon supplement to venture agreements. Berachain’s Series B round, co-led by Framework Ventures and Nova Digital, pushed the blockchain’s valuation to around $1.5 billion and positioned it as one of the more visible new networks in the space. Now, the unusual contract threatens to undermine confidence in the project and may conflict with early-stage investor protections that guarantee later investors do not receive better terms.
Market performance has only added pressure. Since its TGE, BERA has fallen to about $1.04—roughly 66% below the $3 price Nova Digital paid. Framework Ventures, which holds more than 21 million tokens, is reportedly sitting on losses exceeding $50 million. BERA has dropped 19% in the past week and 45% over the past month, according to CoinMarketCap.
Operational issues have further strained sentiment. In November, validators froze the blockchain to address a code issue that jeopardised $12.8 million on the BEX DEX, though funds were later recovered with help from a white-hat hacker. Meanwhile, several apps initially built on Berachain—including IVX and Memeswap—have migrated to other ecosystems, prompting critics to label the chain as stagnant.
Commentators across the industry have voiced their frustration. Startup Anthropologist described Berachain as “officially dead,” citing dwindling development and insider gains. Moonrock Capital’s Simon Dedic called the refund clause a “zero-risk deal for institutions,” warning that retail investors once again bear the brunt of opaque funding practices.
Berachain is attempting to regain momentum. In October 2025, Greenlane Holdings committed $110 million to acquire BERA for a digital asset treasury, with participation from notable firms such as Polychain, Kraken, and Blockchain.com. Polychain also plans to strengthen its influence by expanding its presence on Berachain’s board, according to SEC filings.
Legal experts say the enforceability of Nova Digital’s refund right remains uncertain. Some argue that failing to disclose preferential terms to other investors could violate securities law, while others warn that such a clause may conflict with early-investor protections.
With the February 2026 deadline approaching, Berachain could soon face the consequences of a deal that has come to symbolise the risks of opaque, insider-friendly financing in crypto.
