Crypto Faces Fresh Risk Management: Brevan Howard’s Berachain Refund Provision Ignites Discussion

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Crypto Faces Fresh Risk Management: Brevan Howard’s Berachain Refund Provision Ignites Discussion

Bitget-RWA2025/11/25 04:08

By:Bitget-RWA

- Brevan Howard's $25M Berachain investment includes a 1-year refund clause, shielding its fund from principal risk via Nova Digital. - Legal experts call the performance-linked refund "highly unusual," as Berachain's BERA token has dropped 66% to $1.01 since its $3 TGE price. - While Berachain claims equal terms for Series B investors, anonymous participants revealed they were unaware of the refund mechanism when investing. - The $1.5B valuation deal highlights crypto investing tensions, with refund claus

Brevan Howard’s $25 million venture capital backing of blockchain initiative

Berachain

has sparked debate after it was revealed that

the hedge fund negotiated a one-year refund option

for its investment, essentially shielding its capital from loss. According to a side agreement reviewed by Unchained, Nova Digital, a Brevan Howard affiliate, can retrieve its funds if Berachain’s native asset,

BERA

, fails to meet performance expectations. This right is valid until February 6, 2026,

which is one year following Berachain’s token launch event

scheduled for February 2025.

Currently, BERA is trading near $1.01,

marking a 66% drop from its initial $3 offering

, resulting in a fully diluted market cap of $536.7 million.

Crypto Faces Fresh Risk Management: Brevan Howard’s Berachain Refund Provision Ignites Discussion image 0

The refund arrangement, which requires Nova to deposit $5 million within 30 days of the TGE, has drawn skepticism from legal professionals in the crypto sector.

Gabriel Shapiro of MetaLeX Labs

, who has assessed more than 50 token agreements, described the clause as “extremely rare,” pointing out that it diverges from typical venture capital norms.

Berachain co-founder Smokey the Bera

rejected suggestions of favoritism, stating that all Series B participants were offered the same deal. The company clarified that the side agreement was a mutually agreed solution to address Nova’s liquidity requirements, rather than a unique privilege. However,

two unnamed investors

from the same round told Unchained they were not informed about the refund provision when investing.

The Series B fundraising, jointly led by Brevan Howard’s Nova Digital and Framework Ventures, placed Berachain’s valuation at $1.5 billion.

Framework, which put in $72.4 million

, is now facing unrealized losses exceeding $50.8 million as BERA’s value remains depressed. At the same time,

Berachain’s total value locked reached $3.5 billion

in March, highlighting the project’s on-chain expansion despite price instability.

This controversy reflects wider challenges in crypto investment. While traditional venture capital is built on high risk and potential high returns, refund clauses like Berachain’s could alter institutional investor expectations.

A legal expert

commented, “This could set a new standard for how funds protect themselves from losses in volatile assets.” Brevan Howard, which acquired Nova Digital from Dragonfly Capital in 2023,

has not issued any public statements regarding the issue

With the crypto sector facing both regulatory pressures and falling prices, the Berachain situation highlights the importance of clear investment terms.

As Nova’s refund period ends in early 2026

, the resolution could shape how upcoming blockchain ventures approach their fundraising strategies.

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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