Berachain’s $25M Crisis: Series B Investor Demands Refund in High-Stakes Showdown
Blockchain project faces investor revolt as major backer triggers refund clause.
The Fine Print Bites Back
Berachain confronts a $25 million repayment demand from its Series B venture capital partner—proving once again that in crypto, the smartest contracts sometimes come with the dumbest escape clauses.
When Bullish Turns Bearish
The refund risk exposes the fragile nature of blockchain funding agreements, where paper gains can evaporate faster than a meme coin's liquidity.
VCs Want Their Money Back
That familiar sound you hear? It's venture capitalists suddenly remembering they actually like having money more than they like having exposure to speculative blockchain projects.
The $25 million standoff serves as a stark reminder: in cryptocurrency, sometimes the most valuable token is the one that says 'refund guaranteed.'
An uncommon investment structure in crypto
Berachain’s Series B round was co-led by Framework Ventures and Nova Digital. The startup had previously raised at least $142 million and reached a $1.5 billion token valuation. By late 2024, Berachain had become a high-profile blockchain project with a growing community. However, this refund arrangement deviates from standard venture capital practices.
Documents obtained by Unchained show that Nova Digital’s refund right was formalized in a side letter titled “Nova Side Letter.” The clause allows the fund to withdraw $25 million from the investment until one year post-TGE. Four crypto-focused lawyers described this as highly unusual, noting that refund rights are typically reserved for projects that fail to launch a token, not underperform in price.
The refund option could also clash with rules meant to protect early investors. Some early backers have rights to get deals as good as later investors. This raises questions about whether the refund could break those agreements.
Current market performance adds pressure
Berachain’s BERA token has struggled since its TGE. The token trades at roughly $1.04, down approximately 66% from Nova Digital’s $3 purchase price. Framework Ventures, which co-led the Series B, holds over 21 million BERA tokens worth more than $50 million below their acquisition cost, according to Unchained.
CoinMarketCap data shows Berachain (BERA) is down 19% past week and also down 45% monthly. The network has also faced operational challenges. On November 3, validators halted the blockchain following a code bug that threatened $12.8 million in the native BEX DEX. Berachain resumed operations after recovering the funds from a WHITE hat hacker. Additionally, apps originally launched on Berachain, such as IVX and Memeswap, have migrated to other blockchains.
A recent post from crypto commentator Startup Anthropologist summed up the situation bluntly: “berachain is officially dead…chain is dead…no dapps building…similar to Scroll…launched a DAT that is down bad…Smokey OTCed ~$50m…insiders made FU money.” These observations highlight stagnating development and declining ecosystem activity.
berachain is officially dead.
some berachain highlights (smokey will deny & say market is down bad & we tried, which is also btw OHM days).
– chain is dead
– no dapps building
– similar to Scroll
– launched a DAT that is down bad
– Smokey OTCed ~$50m
– insiders made FU money pic.twitter.com/8oSjot8v5Y
Founder and Managing Partner of Moonrock Capital, Simon Dedic, also weighed in on the Unchained report: “A ‘1 year refund clause’ for a $25M investment after the TGE? A zero-risk deal for institutions and whales while retail is dumped upon…Retail as the uninformed investor at the bottom of the food chain is always the one left holding the bag…Bringing back trust and transparency is more needed than ever before.”
Despite these setbacks, Berachain is attempting to regain confidence. In October 2025, Greenlane Holdings announced a $110 million private placement to acquire BERA for a digital asset treasury. Investors in this initiative include Polychain, Kraken, and Blockchain.com. Polychain also aims to increase its influence by adding members to Berachain’s board, according to Securities and Exchange Commission (SEC) filings.
Legal and strategic implications
It’s unclear if Nova Digital’s refund right is legal. Some lawyers say not telling others could break SEC anti-fraud rules. Others warn it might clash with early investors’ rights, possibly putting them at a disadvantage.
“The most plausible reason a company WOULD enter into an agreement with a lead investor…is because…being able to tell other investors…it would make them more likely to invest,” Gabriel Shapiro, a crypto attorney noted. This indicates that the clause may have been used to attract additional funding while protecting Nova Digital’s position.
Berachain’s refund clause shows how complex crypto investments can be. With February 2026 approaching, the project could face liquidity and investor challenges.
Also Read: Novogratz’s Galaxy Digital Tests Liquidity in Prediction Markets
