As Cointelegraph reported, AVAX tokens were purchased for $100 million a month before the infamous Terra Luna crash.
The Avalanche Foundation has completed the repurchase of 1.97 million AVAX tokens from the now-defunct Luna Foundation Guard (LFG), which purchased the tokens to support the Terra blockchain ecosystem.
In an announcement sent to Cointelegraph, the Avalanche Foundation said it has completed the token buyback process.
While Avalanche’s filing states that it will purchase the tokens for $45.5 million, at the time of writing, Avalanche tokens are trading at $26.95, making 1.97 million tokens worth approximately $53 million at current market prices.
LFG purchased $100 million of AVAX in 2022
In 2022, Terraform Labs founder Do Kwon established LFG to protect Terra's TerraUSD (UST) stablecoin. At the time, LFG built reserves by purchasing Bitcoin and other altcoins, including $100 million worth of AVAX, to stabilize UST, which had a market value of $16.7 billion at the time.
In addition to the LFG purchase, Terraform Labs also exchanged $100 million worth of Terra (LUNA) tokens into AVAX to “strategically align ecosystem incentives.”
However, the Terra collapse ensued. By May 2022, UST lost its peg to the USD, leading to a massive drop in the price of LUNA and a complete collapse of the Terra ecosystem.
Avalanche Foundation buys back 1.97 million tokens from LFG
Since then, the Avalanche Foundation has been working to buy back the tokens from LFG. On October 12, the foundation announced that it had reached an agreement to buy back the tokens. Avalanche said this would ensure that LFG would not violate its original agreement. The foundation wrote:
“This action ensures that LFG does not violate the original agreement’s restrictions on the use of the tokens and protects the tokens from the complexity of a bankruptcy escrow liquidation, while returning 1.97 million AVAX tokens to the Foundation’s holdings.”
In the Avalanche Foundation’s latest announcement, the organization said the token buyback is an “important step” in supporting the sustainable development of the Avalanche ecosystem.
The nonprofit also stressed that the tokens will be used to strengthen its grants, events, and incubator programs.
