Berachain CEO Pushes Back on Reported Terms of Investors Refund Deal

Smokey The Bera, the pseudonymous co-founder and CEO of Berachain, pushed back on the details of a recent report from Unchained regarding a major investors one-year option to get its token investment back.

In an X post responding to Unchained‘s report the evening of Nov. 24, Smokey The Bera claimed that the report’s “framing is (A) incomplete and (B) inaccurate,” but did not provide evidence or a full explanation of what Berachains CEO says are the true terms of the agreement.

The refund terms in question were exposed earlier on Monday by Unchained, which had obtained a copy of a side letter, alongside other documents, showing that Berachain had granted Nova Digital — a fund inside Brevan Howard‘s crypto division, BH Digital — a reportedly unusual right to claim a refund on its $25 million Series B investment in Berachain’s BERA token. Nova Digital led the round back in 2024, alongside Framework Ventures.

The attached copy of the side letter posted by Unchained — dated March 5, 2024 — says that Nova could recover its full investment, all at once or in parts, within one year after Berachains token generation event (TGE), which took place on Feb. 6 of this year. It remains unclear whether other Series B investors were offered the same option.

Berachain has raised at least $142 million since 2021, and was reportedly valued at $1.5 billion for its latest raise, the Series B, after starting as an NFT collection of bear-themed characters.

The Defiant reached out to Berachain for commentary on Novas refund terms, as well as other investors' terms, but has not heard back by press time.

Terms of the Refund

In their X post on Nov. 24, Berachains co-founder confirmed that Nova had a refund clause, but claimed that the Unchained story relied on incomplete and inaccurate information, adding that some of the claims came from “very specific disgruntled ex-team members.”

Specifically, Smokey The Bera clarified what they said are the terms of the refund agreement, noting that Nova Digital is a “liquid-only” vehicle, and had requested the refund clause only in the case that Berachain failed to launch its token and get it listed on exchanges.

Berachain‘s CEO added: “The side letter wasn’t created to close the deal with a party who otherwise would not have been interested, or to prevent against post-launch losses, as the article [by Unchained] implies, and generally has precedent, as noted by external counsel mentioned in the reporting.”

However, as The Unchained report notes, citing the side letter, the refund terms offer Nova the option to receive part or all of its investment back “at any time” within 12 months after the TGE, which appears to directly contradict the terms described in Smokey The Beras Monday X post.

“[...] the Investor may, at any time, and from time to time, from the Effective Date to the date that is twelve months following the TGE [...] require that the Company refund some or all of the Investor's Purchase Amount of the SAFT,” the side letter posted by Unchained reads. SAFT stands for Simple Agreement for Future Tokens, a term that represents the right to purchase tokens before they have launched.

Commenting on Smokey The Bera‘s X post, Jack Kubinec, the report's author, told The Defiant: “the claim that the refund right is only valid if Berachain failed to launch a token is incorrect. It's all in the docs.” Kubinec added that, despite Smokey The Bera’s lengthy response, key questions remain:

“In general, I don't think he challenged any of the facts in the article. I think the big questions he still needs to answer are: Why was Nova Digital given a refund right for after BERA's TGE, and were other investors/MFN right investors from earlier rounds told that Berachain had this right？”

In the same X post, Smokey The Bera said that no other Series B investors were given most favored nation (MFN) protections, which guarantee matching terms, while Unchained reported that “at least one Berachian investor” other than Nova did in fact have an MFN clause, citing people with knowledge of the matter.

Sitting on Losses

Meanwhile, as of press time, BERA is trading around $1, down more than 90% from its $14.80 debut on Feb. 6, and roughly 65% below Novas reported investment price of $3 per BERA.

BERA token price since launch. Source: CoinGecko

According to Unchained, Framework Ventures is also about 70% in the red on its investment, as they purchased over 21 million BERA for an average price of $3.42 per token in the Series B. The Defiant reached out to Framework for commentary on their deal as well, but hasnt heard back by press time.

As Unchained reported, assuming that other investors — which include Polychain, Arrington Capital, and Tribe Capital — also participated at a $1.5 billion valuation, they would also be sitting on losses, as Berachains current FDV sits around $545 million.

In the Monday X response, Smokey The Bera also reassured the public that Nova remains “one of, if not THE, largest tokenholder in Berachain,” adding though that the team cant disclose every detail of its investor agreements due to “compliance restrictions.”

However, it remains unclear whether or not Nova Digital has requested any refund on its $25 million investment. Per the side letter, Berachain needs to return the requested amount within five days of receiving a refund request from Nova.

In a March interview with Unchained, Smokey The Bera said if the Berachain team could go back and start over, they “probably would not have sold as much of our supply to VCs.”