Berachain Series B Investment Terms Dispute: Nova Digital's Special Redemption Rights Raise Legal Concerns

Source: CryptoNewsNet Original Title: Allegations of Shady Dealings in a Major Exchange-Listed Altcoin – Claims It Could Face Legal Trouble Original Link: Next-generation blockchain project Berachain (BERA) has granted an unusual “right of redemption” on its $25 million Series B investment to Nova Digital fund under Brevan Howard Digital, the company has revealed.

This right allows the fund to reclaim its investment within one year of Berachain's token generation event (TGE).

This situation raised legal questions because of allegations that other venture capital investors were not informed of the contract terms.

Berachain, which emerged as a bear-themed NFT project in 2021, became one of the most talked-about projects in the cryptocurrency world by 2024. The company has raised at least $142 million in venture capital to date, and its token valuation reached $1.5 billion in its latest funding round. The round was co-led by Framework Ventures and Brevan Howard's Nova Digital fund.

The involvement of traditional financial institutions like Brevan Howard gave Berachain significant credibility. An anonymous former employee quoted Papa Bear, one of Berachain's anonymous founders, as saying the fund's brand would “legitimize” the project.

According to the documents, the repayment clause allows Nova Digital to reclaim the $25 million it invested over a period of one year, starting with the TGE on February 6, 2025. This clause eliminates the risk to the fund's principal.

The BERA token price is currently approximately 66% below its investment price of $3. Therefore, exercising the redemption right makes financial sense. However, because token allocations are subject to a one-year lockup period, Nova will be forced to relinquish its token rights in the event of redemption demand.

Four cryptocurrency-focused attorneys noted that this requirement is highly unusual in the industry. Two noted that redemption rights are typically granted only if the project fails to launch the token. The most critical debate centers on whether the redemption rights are disclosed to other investors. If undisclosed, it could create problems with securities law and investor equity concerns.