2024-10-14
The Avalanche Foundation announced on October 11, 2024 that it has struck a
deal to repurchase 1.97 million AVAX tokens it previously sold to the Luna
Foundation Guard (LFG) in April 2022. The deal is now awaiting approval from
the Bankruptcy Court.
The Avalanche Foundation will return
1.97 million AVAX to the Foundation’s holdings. This fund will be used for the
Foundation’s support growth and development of the Avalanche ecosystem.
In April 2022, LFG, a Singapore-based
nonprofit supporting the Terra blockchain, bought $100 million worth of
Avalanche tokens (AVAX) to increase its reserves for Terra’s stablecoin, UST,
and the LUNA token.
However, after the Terra ecosystem's
dramatic collapse in May 2022, the fate of the AVAX tokens remained uncertain.
Today, those tokens are worth around $56 million, representing a 44% decrease
from their original value.
The Avalanche Foundation confirmed it
will repurchase the tokens from Terraform Labs’ bankruptcy estate. The
court-approved settlement could close for $45.5 million, though the current
market value of the AVAX tokens stands at approximately $56 million. Terraform
Labs, which filed for bankruptcy following the Terra collapse, stated that the
settlement aims to minimize litigation costs and maximize the remaining assets
for distribution to creditors.
The repurchase agreement comes after a
Delaware bankruptcy judge approved Terraform Labs' winding-down process,
following a $4.5 billion settlement with the U.S. Securities and Exchange
Commission (SEC) earlier this year.
The Terra ecosystem collapse in 2022
wiped out nearly $60 billion from the market caps of Terra’s token LUNA and
stablecoin UST, leading to widespread fallout across the crypto industry.
