Avalanche Foundation to repurchase 1.97M AVAX from Terra

The Avalanche Foundation is set to buy back 1.97 million AVAX (CRYPTO:AVAX) tokens it previously sold to the Luna Foundation Guard (LFG) in April 2022, just a month before Terra’s ecosystem collapse.

Valued at $45.5 million, the repurchase is part of a settlement filed in Delaware Bankruptcy Court, awaiting approval as of October 11.

Originally sold for $100 million, the AVAX tokens have since lost 42% of their value, currently worth $57.4 million on the market.

The agreement ensures that LFG will not violate the original deal's restrictions on token use and protects the tokens from potential complications arising from bankruptcy liquidation.

The repurchase was calculated using the volume-weighted average price of AVAX tokens in early August 2024.

Terraform Labs, the entity behind the Terra blockchain, stated that this settlement reduces litigation costs and allows the company to recover close to the current market value of the tokens.

LFG had originally bought the AVAX tokens to build reserves for TerraClassicUSD (CRYPTO:USTC), Terra’s algorithmic stablecoin.

However, USTC lost its peg to the U.S. dollar less than a month later, leading to a collapse that wiped nearly $60 billion from the market caps of USTC and Terra Luna Classic (CRYPTO:LUNC).

This repurchase is part of Terraform Labs' broader bankruptcy wind-down process, following its $4.5 billion settlement with the U.S. Securities and Exchange Commission (SEC) in June.

As part of its closure, Terraform estimates it will pay between $185 million and $442 million to settle remaining operations.

At the time of writing, the Avalanche price was $28.96.