- The Avalanche Foundation was granted permission by a bankruptcy court to repurchase more than $52 million worth of AVAX tokens that it had sold to the now-defunct Luna Foundation Guard in early 2022.
- With this decision, Avalanche’s ill-fated association with the unsuccessful algorithmic stablecoin project comes to an end.
After more than two years, the Avalanche Foundation is ending its involvement with the defunct blockchain Terra. The foundation has completed repurchasing tokens from the Luna Foundation Guard, an entity founded by Do Kwon of Terraform Labs to avoid the exact kind of death spiral that ultimately befell the unsuccessful algorithmic stablecoin TerraUSD (UST), the announcement said Thursday.
In 2022, Kwon established LFG, a spin on the online slang phrase “Let’s Freaking Go!” as a middleman that would purchase bitcoin and other cryptocurrency assets, such as AVAX, for up to $10 billion. This would serve as a strategic reserve for his stablecoin, which was then well-liked but ultimately unstable.
Two transactions that placed $200 million worth of UST and its related token LUNA on the Avalanche Foundation’s balance sheet and $100 million worth of AVAX tokens on LFG’s were part of that plan. Through a process that either burnt or purchased LUNA, which had a free-floating price, UST was intended to keep a peg to the US dollar.
Despite the fact that the partnership was intended to “strategically align incentives” across the blockchain ecosystems, Avalanche suffered the same fate as almost everything that came into contact with Terra. The Avalanche Foundation has been attempting to repurchase Kwon’s UST tokens since its collapse.
According to a statement, the non-profit was just recently given authorization by the bankruptcy court to carry out the repurchases, which allowed it to repurchase 1.97 million AVAX tokens, which are currently worth about $52 million.
This repurchase, which we are happy to complete, demonstrates our continued dedication to the growth of the Avalanche ecosystem. He mentioned that the money would be used to support events, grants, and incubators that promote technology and community growth.
In the continuous efforts to promote the expansion and sustainability of the Avalanche ecosystem, the token buyback is a significant milestone.
After a jury found Kwon and Terraform Labs guilty of deceiving investors, the two parties reached a $4.47 billion civil settlement with the U.S. Securities and Exchange Commission in June 2024. The 2022 market contagion incident that took down companies like hedge fund Three Arrows Capital, lending app Celsius, and the FTX cryptocurrency exchange is sometimes attributed to the fall of TerraUSD.
Since March 2023, Kwon has been held captive in Montenegro. His extradition has being sought by South Korea and the United States.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
