Undisclosed Refund Clause Pits Brevan Howard Against Berachain

Brevan Howard's Nova Digital Fund has secured a rare and risk-free investment in Berachain, a blockchain startup, by obtaining a $25 million refund right tied to its Series B funding round, according to reports. The clause, disclosed in documents reviewed by Unchained, allows the hedge fund's crypto arm to recoup its investment within a year if the BERA token underperforms, effectively insulating it from market volatility. This arrangement, co-led with Framework Ventures, was part of a $142 million funding round that valued Berachain at $1.5 billion in early 2025 according to LookOnChain.

The refund mechanism, activated through a simple agreement for future tokens (SAFT), requires Brevan Howard to deposit $5 million into Berachain within 30 days of the token generation event (TGE), which occurred on February 6, 2025. If the fund exercises its right by February 6, 2026, Berachain would face pressure to raise $25 million in cash to repay the investment—a scenario that could trigger liquidity challenges for the project according to Coinotag. Industry lawyers have called such clauses "extremely rare" in token financing, noting that refund rights typically apply only if a project fails to launch tokens, not post-TGE according to LookOnChain.

BERA's performance has since deteriorated sharply, trading at roughly $1 as of November 2025—down 67% from Brevan's $3-per-token investment price. The token's fully diluted valuation now stands at $536.7 million, according to The Block, raising questions about the viability of the refund clause in a down market. The one-year lock-up period for investor tokens adds another layer of complexity: exercising the refund right could force Brevan to forfeit its BERA allocation, though the financial upside of recouping $25 million appears compelling.

Berachain, an Ethereum-compatible Layer 1 blockchain built on the Cosmos SDK, has drawn attention for its cult-like following, stemming from its origins in the 2021 "Bong Bears" NFT series. The project's Series B also included participation from Arrington Capital, Polychain, and Tribe Capital, though it remains unclear whether other investors received similar protections according to The Block. Legal experts have highlighted potential enforceability issues, particularly since the clause was not disclosed to broader stakeholders, complicating Berachain's ability to manage expectations if the refund is triggered.

The arrangement underscores growing skepticism around crypto venture capital structures, where traditional risk-reward dynamics often clash with novel financial engineering. While Brevan Howard's approach minimizes downside risk, critics argue it could set a precedent for preferential treatment in token sales, eroding trust among retail and institutional investors according to LookOnChain.