Berachain's provision of a $25 million refund option to Nova Digital may have violated SEC anti-fraud requirements.
TL;DR
Berachain gave Nova Digital a special $25 million refund option, making the investment risk-free. This was not disclosed to other Series B investors, potentially violating SEC anti-fraud rules and most-favored-nation clauses.
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According to Foresight News , citing Unchained, documents show that Berachain granted Brevan Howard's Nova Digital fund a special refund right during its Series B funding round, making its venture capital investment in Berachain virtually "risk-free." Nova Digital invested $25 million in BRA tokens in March 2024 at $3 per token. The fund also received the right to claim a full refund within one year of the TGE, with a deadline of February 6, 2026.
Crypto lawyers say it's extremely rare for a project to offer investors a refund right after receiving TGE. Currently, the BERA token is priced at around $1.02, down about 66% from the investment price. An anonymous Series B investor stated that Berachain did not disclose to them that other investors had refund terms. Lawyers point out that this could violate most-favored-nation provisions and SEC anti-fraud requirements.