The Avalanche Foundation sold 1.97 million AVAX worth $100 million in 2022 to the Terra foundation before its collapse. Now they are buying it all back for $45.5 million.
The Avalanche Foundation plans to repurchase the 1.97 million Avalanche tokens that it had sold to the Luna Foundation Guard (LFG) in April 2022, a month before the Terra blockchain ecosystem collapsed.
The Avalanche Foundation is buying 1.97 million AVAX tokens for $45.5 million — worth $57.4 million at the current market — from the bankrupt assets of Terraform Labs.
A repurchase and settlement agreement filed on October 9 is pending court approval, the Avalanche Foundation said in an X post on October 11.
"This action ensures that LFG will not violate the original agreement's restrictions on the use of the tokens and protects the tokens from the complexities of the bankruptcy trustee's liquidation, while returning the 1.97 million AVAX to the Foundation's holdings."
Terraform Labs stated in the filing that the 1.97 million AVAX tokens are now worth over 42% less than the $100 million that the Luna Foundation Guard paid in April 2022. The settlement will reduce litigation costs and deplete fewer available assets to distribute to creditors. It will ensure the company recovers an amount closer to the current market value of 1.97 million AVAX tokens, Terraform Labs added. The settlement amount is based on the volume-weighted average price of the AVAX token over a 7-day period in early August 2024.
LFG (Luna Foundation Guard) is a non-profit organization tasked with building and maintaining reserves for Terra's algorithmic stablecoin TerraClassicUSD (USTC), which the organization had used to purchase the AVAX. Less than a month later, USTC lost its peg to the US dollar and crashed to $0.006.
Terraform Labs – the company behind the Terra Layer 1 blockchain – had also swapped $100 million worth of Terra Luna Classic (LUNC) for AVAX to "adjust the ecosystem incentive strategy" in April. Data from CoinGecko shows nearly $60 billion was wiped off the market capitalization of LUNC and USTC due to the collapse.
The repurchase agreement comes as the Delaware bankruptcy judge approved Terraform Labs' motion to cease operations last month after settling a $4.5 billion case with the Securities and Exchange Commission in June. Terraform was said to have proposed that they could pay between $185 million to $442 million as part of a gradual wind-down — though their total losses were "incalculable".
Keep following Coin Moi for the latest updates in the market!
The article Avalanche Foundation buys back nearly 2 million AVAX sold to Terra first appeared on CoinMoi.
