The Avalanche Foundation has announced an agreement to repurchase all AVAX tokens previously sold to the Luna Foundation Guard (LFG), in April 2022. The agreement is currently awaiting approval from the Bankruptcy Court, where LFG is undergoing restructuring.
Upon approval, the repurchase will effectively remove the AVAX tokens from the Luna Foundation Guard’s (LFG) assets, protecting them from potential liquidation or distribution to creditors.
By acquiring these tokens, the Foundation will be able to allocate them towards various initiatives, including community grants, ecosystem development, and strategic partnerships.
The Luna Foundation Guard, originally established to bolster the Terra ecosystem, had acquired AVAX tokens as part of its financial reserves, reinforcing its commitment to growth and innovation.
However, the collapse of LUNC and UST led to a significant loss of value for the LFG’s holdings.
The negotiation between Avalanche Foundation and Luna Foundation Guard ensures LFG’s compliance with the original token sale agreement, avoiding any potential breaches of restrictions on token usage.
“This action ensures that LFG would not violate the original agreement’s restrictions on the tokens’ use and shields the tokens from the complexity of a bankruptcy trustee liquidation, while returning 1.97M AVAX to the Foundation’s holdings. This further enhances the Foundation’s ability to support the ongoing growth and development of the Avalanche ecosystem.”, the Avalanche Foundation stated.
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By repurchasing the AVAX tokens from LFG, the Avalanche Foundation aims to mitigate the potential adverse effects of the Luna collapse on the Avalanche ecosystem. This move to repurchase AVAX tokens is anticipated to bolster confidence in the AVAX cryptocurrency.
Furthermore, it is expected to solidify Avalanche’s standing within the competitive market. The Foundation is committed to promoting the growth and development of its ecosystem, ensuring stability and resilience amid challenging circumstances.
