Berachain has been exposed to have signed a Term Sheet with a Venture Capital firm, allowing the lead investor to make a risk-free investment.
Another VC has already lost 50 million USD
According to Unchained, Layer 1 project Berachain reportedly granted one of its lead investors in the latest B-round funding, hedge fund Brevan Howard's Nova Digital fund, an extremely rare "risk-free" investment clause. The agreement reveals that Nova Digital fund has the unconditional right to request the return of its $25 million investment principal within one year after the Token Generation Event (TGE) of the project.
This disclosure of the special clause comes at a time when Berachain's token BERA has been underperforming in the market, sparking intense questioning from the crypto community and other investment firms regarding the fairness of the project's funding.
Risk-Free Privilege in Venture Capital
Berachain has raised a total of at least $142 million, with its token reaching a valuation of up to $1.5 billion in the B-round funding. This round of funding was co-led by Framework Ventures and Nova Digital fund. However, leaked documents show that Brevan Howard's Nova Digital fund has gained the right to exercise the refund "within the longest one year after the TGE on February 6, 2025."
The financial logic behind this clause is clear and highly skewed: if the BERA token performs well, Nova Digital fund can enjoy substantial returns; however, if the token price falls, the fund can demand a full refund, essentially providing a zero-risk guarantee for its $25 million principal.
Reportedly, a former Berachain employee recalled that the co-founder "Papa Bear" once indicated that Brevan Howard's participation was aimed at enhancing the project's legitimacy. However, other institutions that also participated in the B-round funding, including Framework Ventures, Arrington Capital, Hack VC, Polychain, and Tribe Capital, allegedly were not informed of the existence of this side agreement. Against the backdrop of the BERA token price dropping from $3 at the time of investment to around $1 (a decrease of about 67%), Framework Ventures is facing a loss of over $50 million.
Imminent Potential Repayment Pressure and Legal Disputes
Based on the current price of the BERA token (a decrease of about 66% from the $3 investment price), the Nova Digital fund exercising its refund right aligns with its financial interests. If the fund chooses to exercise this right before the deadline on February 6, 2026, Berachain's fund will face significant financial pressure to raise $25 million in cash to repay the investor. The project documents indicate that the tokens purchased by Berachain investors have 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 particular agreement is still in question, especially due to the "secret" terms signed without the knowledge of other investors.
The exposure of this event immediately caused a strong backlash in the crypto community, with community comments largely focusing on the anger towards "lack of transparency" and "institutional vs. retail asymmetry."
Berachain co-founder Smokey the Bera responded on social media, stating that the report was "neither accurate nor complete."
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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