Podcast Summary: Unchained Ep. 961

Episode Title: Why Berachain Gave Brevan Howard a Secret $25M Escape Hatch
Air Date: November 26, 2025
Host: Laura Shin (with Executive Editor Steve Ehrlich)
Guests: Jack Kubinec (Investigative Reporter)

Overview of the Episode

This episode dives into an explosive investigative story about Berachain — a Layer 1 blockchain — and an unusual, secretive $25 million refund clause (or “escape hatch”) granted to hedge fund Brevan Howard’s crypto arm, Nova Digital. Through a revealing conversation with journalist Jack Kubinec, the podcast explores how and why this deal came about, why it was kept secret from other investors, the legal and ethical implications, and what it says about transparency issues in the crypto industry.

Key Discussion Points & Insights

1. Background: The Secret Refund Clause

• Document Leak & Discovery: Jack Kubinec reports that internal documents from Berachain’s Series B fundraising round reveal Nova Digital (under Brevan Howard) was given the exclusive right to ask for a full $25M refund, at any time, for up to a year after Berachain’s token launch (TGE in Feb 2025) (04:21).

  • “This is a really remarkable kind of right. It’s very unusual, according to lawyers that we spoke with.” — Jack Kubinec [04:41]

• Implications: This guaranteed return regardless of token performance is an unheard-of deal for a single investor in crypto fundraising rounds, creating a stark difference between Nova Digital and other Series B investors, who stood to lose money if the token’s value fell.

2. Impact on Investors and Berachain

• Unfair Advantage: Other Series B investors, who also bought at $3 per token, are currently nursing losses as BERA trades closer to $1. They were not notified of this special refund clause.

  • “If I was another investor in Berachain Series B and I wasn’t told that Nova Digital was given a refund, I'd feel a little bit left out to dry.” — Jack Kubinec [01:46]

• Berachain’s Problems: The chain’s usage and token price have slumped, putting them at risk of facing a $25M hole if Nova Digital exercises their refund right by Feb 2026 (07:39).

3. How Common Are Refund Clauses?

• Context: Refund rights (“put options”) are rare but sometimes included as insurance in early-stage crypto deals if a project never launches its token. What’s unprecedented here is a post-launch, one-year rolling refund for a single investor.

  • “What's really crazy […] is for you to say, ‘Hey, even if you launch a token, I want a no-questions-asked call option that I can exercise at any point for up to a year after TGE.’” — Jack Kubinec [12:07]

• Comparable Cases: Defi project Flying Tulip offered public, universal refund rights, but Berachain’s refund was secret, selective, and not disclosed publicly (13:31).

4. Most Favored Nation (MFN) Clauses: Legal and Ethical Questions

• MFN Basics: Early investors sometimes receive “Most Favored Nation” clauses, guaranteeing they’ll get equal or better terms than later investors (21:26). Offering Nova this refund without notifying others may breach MFN terms.

  • “…there is a world where basically Berachain offering Nova Digital a refund right, and not informing other investors, would trigger that Most Favored Nation right.” — Jack Kubinec [22:32]

• Gray Areas: If Nova Digital’s side deals (such as market making or unique commercial agreements) are “special” enough, Berachain might argue they didn’t have to offer the refund to others. The lack of transparency leaves the legal situation murky.

5. Berachain’s Response & Public Transparency

• PR Strategy: Despite ample time and multiple requests, Berachain and its founder Smokey failed to provide detailed responses or address the core questions. Their eventual public statements did not dispute the main facts of the reporting.

  • “I don’t think he actually challenges the facts in the article very much. […] They just don’t really refute the reporting we put out.” — Jack Kubinec [17:47]

• Journalistic Transparency: Unchained published the unredacted term sheets and documents, an unprecedented move to maximize public transparency. Readers are urged to read the full materials themselves (34:30).

6. Nova Digital, Brevan Howard, and Industry Implications

• Spin-Out and Complexity: Nova Digital, the fund at the center of the story, is currently being spun out from Brevan Howard Digital. This raises questions about who ultimately receives any refunded money (28:23).
• Larger Industry Critique: Jack and Steve highlight the recurring lack of transparency and insider-friendly dealmaking in crypto fundraising, using this case as a cautionary tale for future investors and builders.

Notable Quotes & Memorable Moments

• On the Sweetheart Deal:

  “If I could take that deal, I would. I give you money, if the token performs well I get to keep it, but if it performs badly, I get my money back. Like, that is a fantastic term.” — Jack Kubinec [07:39]

• On Hidden Risks for Other Investors:

  “If I was a Series B investor and I spent $3 per token, I could be down quite a bit at this point in time. That’s what’s unique here.” — Jack Kubinec [01:46]

• On Transparency:

  “The deeper you get into the industry, you see that oftentimes what is going on behind the scenes is not the same as what's talked about publicly. […] Investors and the public deserve transparency.” — Jack Kubinec [32:55]

• On MFN Rights:

  “When it comes to someone having a free put on a token that's down 67%, that's pretty meaningful. If you were one of those firms’ LPs, you might be really aggrieved.” — Steve Ehrlich [24:42]

• On Berachain’s Defense:

  “He said… the refund right was really meant as a hedge against Bear Chain not launching a token or getting listed on an exchange… but how does that square with the fact that the refund right is available for up to a year after the TGE?” — Steve Ehrlich [20:20]

Important Segments with Timestamps

• [04:21] Discovery of the secret $25M refund right for Nova Digital
• [07:39] Deep dive: Why the clause is highly unusual and its impact on stake­holders
• [13:15] Comparison with other projects’ refund clauses and how Berachain’s is unique
• [21:26] MFN rights explained and potential legal/ethical ramifications
• [28:23] Nova Digital's spin-out from Brevan Howard and implications for the refund
• [32:55] Closing thoughts on transparency, industry takeaways, and calls for openness

Takeaways & Closing Thoughts

• Transparency Crisis: The Berachain–Nova Digital secret refund is emblematic of deeper transparency issues pervading crypto fundraising.
• Investor Beware: Retail and non-insider investors face significant information gaps; deals may be less fair than they appear.
• Legal and Ethical Clouds: While outright illegality is uncertain, the non-disclosure and one-sidedness of this deal are widely viewed as unsavory.
• Documented for All: Unchained’s publication of the full unredacted deal documents is a notable and rare act of transparency in crypto journalism.
• Key Questions Remain: Has Nova Digital exercised this refund yet? Will other investors seek recourse? Will Berachain be forced to pay, and what precedent does this set?

End of Summary