Berachain's Refund Policy Balances Safeguarding Investors With Ensuring Project Longevity

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Berachain's Refund Policy Balances Safeguarding Investors With Ensuring Project Longevity

Bitget-RWA2025/11/25 09:24

By:Bitget-RWA

- Berachain co-founder denies claims of a $25M refund clause in its Series B funding, calling reports "inaccurate and incomplete." - The clause allows Nova Digital to reclaim its $25M investment until February 2026, triggering legal criticism for its "highly unusual" post-TGE refund terms. - Legal experts warn the clause may violate MFN rights, as undisclosed terms could disadvantage other investors while shielding Nova from downside risk. - The $100M Series B deal at $1.5B valuation has intensified debate

Berachain's co-founder has labeled reports about a $25 million refund clause linked to its Series B funding as "misleading and lacking context," as scrutiny mounts over the layer-1 blockchain's financing arrangements. The debate focuses on a provision allowing Brevan Howard's Nova Digital fund to reclaim its full investment up until February 6, 2026, which is one year after Berachain's token generation event (TGE).

Documents reviewed by Unchained

highlight the distinctive terms, which stipulate that Nova must transfer $5 million into a

Berachain

wallet within 30 days following the TGE to activate the refund mechanism.

This clause has faced significant pushback from legal professionals, who characterize such post-TGE refund provisions as "extremely rare" in token fundraising deals.

Gabriel Shapiro of MetaLeX Labs

, who has worked on more than 50 token transactions, remarked that he had never seen a similar arrangement. In standard venture deals, investors typically accept risk, but this setup shields Nova from losses while still allowing for gains.

BERA, Berachain's token

, is currently priced at $1.02, representing a 66% drop from Nova's $3 entry point.

The agreement's terms may also present legal challenges.

Two Series B investors told Unchained

they were not made aware of the refund clause when they invested. Shapiro from MetaLeX and other lawyers pointed out that the clause could activate Most Favored Nation (MFN) rights, which ensure that early investors receive any advantageous terms given to later participants.

Sources familiar with the matter

indicated that this setup could infringe on MFN rights held by other Berachain backers.

Berachain's Refund Policy Balances Safeguarding Investors With Ensuring Project Longevity image 0

Despite the criticism,

Berachain's anonymous co-founder

, Smokey the

Bera

, defended the deal on X, arguing that the coverage was incomplete and highlighting that Brevan Howard is still a significant token holder. The foundation referenced "complex commercial agreements" as justification for the terms, but did not elaborate further.

Unchained could not verify

whether Nova made the required $5 million deposit by March 8, 2025, which is necessary to keep the refund option active.

The Series B funding round, which was co-led by Framework Ventures and Nova Digital,

placed Berachain's valuation at $1.5 billion

and brought in $100 million. The structure of the deal has fueled ongoing discussions about transparency in blockchain fundraising, especially as BERA's price has struggled.

Nova's possible use of the refund clause

-which remains valid until February 2026-could require Berachain to pay back $25 million in cash or lose token allocations, due to a one-year lockup on investor tokens.

Brevan Howard Digital and Nova co-founder Ashwin Ramachandran chose not to respond

regarding the terms

. At the same time, Berachain's defense of the clause highlights ongoing tensions in crypto between protecting investors and ensuring project longevity.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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