Berachain Co-Founder Refutes Claims on Brevan Howard Refund Right, Calls Story 'Inaccurate'

Refund Right Explained

Berachain, the bear-themed blockchain project that secured a $142 million venture capital raise at a $1.5 billion token valuation, is embroiled in controversy after documents revealed that co-lead investor, Brevan Howard Digital’s Nova fund, was granted a refund right on its Series B investment. The project’s anonymous co-founder, Smokey the Bera, has since released a lengthy statement via X vehemently denying the story is “inaccurate and incomplete,” asserting the clause was required for the investor’s compliance, not to guard against post-launch losses.

According to a report by Unchained, the documents showed the Nova fund was granted the right to recoup its principal investment for up to a year after the token generation event (TGE) on Feb. 6, 2025. Smokey the Bera, who apologized for the delay in his response, accused the article of being “put together with the direct input of some bad faith actors, namely some very specific disgruntled ex-team members.”

The Berachain co-founder specifically addressed the nature of the refund right, stating that Nova’s compliance team required a provision to guard against a scenario in which Berachain failed to TGE and get listed. He explained that a side letter committed Nova to “additional commercial arrangements, including an agreement to provide liquidity on the network, which was only possible upon launch.”

Smokey insisted that Nova is still one of the largest tokenholders in Berachain, serving as a liquidity provider and holding both locked BERA from the Series B and liquid BERA purchased on open markets. He stated that Nova has “increased their BERA exposure over time.” He also flatly denied the claims that other purchasers were issued most-favored-nation (MFN) clauses in the Series B.

Operational Challenges and ‘Revenge Arc’

The refund clause, however, remains controversial, with four unnamed crypto-focused lawyers quoted in the Unchained report branding the term highly unusual. The BERA token is currently trading near $1.02, a third of the $3 price at which Nova Digital invested. According to the report, this gives the fund a strong financial incentive to exercise the right before the February 2026 deadline.

Meanwhile, the co-founder acknowledged the negative media cycle and the pressure on the community but reaffirmed the project’s commitment.

“People love an opportunity to dunk on Berachain… In a perfect world, I could speak even more explicitly about some of the topics mentioned, but I’ve also got an obligation to respect the confidentiality and compliance restrictions that we’re accountable to, with the best interests of our tokenholders in mind.”

Despite ongoing operational challenges—including $367 million in net outflows, a brief network halt in early November, and reports of community decline—Smokey reiterated the project’s defiance: “Revenge arc remains on, even if we’re taking a few sucker punches.” This is supported by the recent announcement of a new Digital Asset Treasury company, which secured $110 million in funding from major investors like Polychain and Kraken to purchase BERA.

FAQ ❓

• What sparked the Berachain controversy? Documents revealed Nova fund had a refund right on its $142M Series B investment.
• How did Berachain respond? Co‑founder Smokey denied the claims, saying the clause was for compliance, not losses.
• Why is the clause controversial? Lawyers called it highly unusual, especially with BERA trading far below Nova’s entry price.
• What’s next for Berachain? Despite $367M outflows and network issues, the team vows resilience with new $110M backing.