The Avalanche Foundation has officially repurchased 1.97 million AVAX tokens, previously held by the now-dissolved Luna Foundation Guard (LFG). Originally purchased to support the Terra blockchain ecosystem, these tokens have now been reclaimed by Avalanche in a strategic move aimed at maintaining compliance with initial agreements and avoiding complications tied to LFG’s bankruptcy.
AVAX Tokens Gain in Value Amid Market Rally
Initially, the 1.97 million AVAX tokens were valued at $45.5 million, but recent market conditions have increased their worth to approximately $53 million. By reclaiming these tokens, the Avalanche Foundation ensures that they can now be used to support its ecosystem through grants, incubation programs, and community events.
The Luna Foundation Guard was established by Terraform Labs founder Do Kwon in 2022 to stabilize Terra’s algorithmic stablecoin, TerraUSD (UST), by creating a reserve fund. Part of this strategy involved acquiring a $100 million allocation of AVAX to enhance cross-ecosystem support. However, Terra’s collapse in May 2022 disrupted these plans, leading the Avalanche Foundation to pursue the return of the AVAX tokens. On October 12, a settlement agreement was reached for the repurchase based on AVAX’s seven-day volume-weighted average price in August 2024.
Legal Developments: $4.5 Billion Settlement Approved for Terraform Labs
In July, U.S. District Court Judge Jed Rakoff approved a $4.5 billion settlement, requiring Terraform Labs and Do Kwon to pay penalties while permanently barring them from engaging in transactions involving “crypto asset securities,” including Terra ecosystem tokens. Originally proposed at $5.3 billion by the SEC, the fine was negotiated down after Terraform Labs challenged the amount. The company, under Chapter 11 bankruptcy protection, now faces significant challenges in meeting these financial obligations.
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