Berachain exposed for signing dual contracts with VCs, allowing lead investors to invest without risk

According to Unchained, Layer 1 project Berachain was revealed to have privately granted one of the lead investors in its latest Series B round—Nova Digital Fund under hedge fund Brevan Howard—an extremely rare "risk-free" investment clause. The agreement states that Nova Digital Fund has the unconditional right to request a refund of its $25 million investment principal within one year after the project's Token Generation Event (TGE).

The exposure of this special clause comes at a time when Berachain's token BERA is performing poorly in the market, sparking fierce questions from the crypto community and other investment institutions about the fairness of the project's fundraising.

Risk-Free Privileges for Venture Capital

Berachain has raised at least $142 million in total, with its token valued at up to $1.5 billion in the Series B round. The round was co-led by Framework Ventures and Nova Digital Fund. However, leaked documents show that Brevan Howard's Nova Digital Fund was granted the right to exercise a refund "for up to one year after the TGE on February 6, 2025."

The financial logic behind this clause is clear and highly tilted: if the BERA token performs strongly, Nova Digital Fund can enjoy considerable returns; if the token price drops, the fund can request a full refund, essentially providing zero-risk protection for its $25 million principal.

Reportedly, a former Berachain employee recalled that co-founder "Papa Bear" once pointed out that Brevan Howard's involvement was intended to enhance the project's legitimacy. However, other institutions that also participated in the Series B round, including Framework Ventures, Arrington Capital, Hack VC, Polychain, and Tribe Capital, were reportedly not informed of this side agreement. With the BERA token price having dropped from $3 at the time of investment to about $1 (a decline of about 67%), Framework Ventures is facing losses exceeding $50 million.

Imminent Potential Repayment Pressure and Legal Disputes

Based on the current BERA token price (down about 66% from the $3 investment price), it is in Nova Digital Fund's financial interest to exercise the refund right (9). If the fund chooses to exercise this right before the deadline of February 6, 2026, the Berachain Foundation will face enormous financial pressure to raise $25 million in cash to repay the investor. Project documents show that tokens purchased by Berachain investors are subject to a one-year lock-up period, and if Nova Digital exercises the refund right, it may need to forfeit its BERA token allocation.

Currently, the legality of this special agreement remains in question, especially as the "secret" clause was signed without the knowledge of other investors.

The exposure of this incident immediately triggered a strong reaction in the crypto community, with comments largely focused on anger over the "lack of transparency" and "asymmetry between institutions and retail investors."

Berachain co-founder Smokey the Bera responded on social media, stating that the report was "neither accurate nor complete."