The Avalanche Foundation has negotiated an agreement to repurchase all AVAX tokens previously sold to the Luna Foundation Guard (LFG) in April 2022, and this agreement is currently awaiting approval from the Bankruptcy Court. This repurchase ensures that LFG does not violate the restrictions on the use of the tokens set out in the original agreement, while protecting the tokens from the liquidation process of a bankruptcy trustee. As a result, 1.97 million AVAX tokens will return to the Avalanche Foundation’s holdings, where they will be used to support the growth and development of the ecosystem.
Avalanche’s rapid ecosystem growth and strong technical infrastructure have positioned AVAX as a notable asset in the crypto world. However, the collapse of the Terra ecosystem had created uncertainty around the future of the AVAX tokens held by LFG. This uncertainty could have led to potential selling pressure and a loss of confidence in the market. By proactively negotiating this repurchase, the Avalanche Foundation plays a key role in restoring trust within the community.
Approval of this repurchase during the bankruptcy process prevents the AVAX tokens held by LFG from being sold on the open market, thereby preventing potential price volatility. This move also strengthens the Avalanche Foundation’s ability to support innovative projects within the ecosystem. The 1.97 million AVAX tokens being repurchased can be used for funding and incentive programs to drive ecosystem growth and expansion.
This strategic move not only serves Avalanche Foundation’s long-term growth objectives but also mitigates the risks associated with LFG’s financial crisis. By preventing the liquidation of the tokens by the bankruptcy trustee, the potential negative impact of such a sale is averted.
With this development, the Avalanche Foundation secures the sustainability of its ecosystem while ensuring that AVAX remains strong in the long term.