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    Avalanche Foundation to buy back nearly 2M AVAX sold to Terra in 2022

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    The Avalanche Foundation plans to repurchase 1.97 million Avalanche tokens from the Luna Foundation Guard’s bankruptcy estate for $45.5m. The buyback comes following the Terra blockchain system’s crash and aims to prevent agreement violations and potential liquidation complications. Terraform Labs believes this will keep litigation costs low and ensure more assets for creditors. It was also disclosed that Terraform may end up paying between $185m and $442m as part of its shutdown plan after settling with the SEC for $4.5 billion in June.

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    Avalanche Foundation plans to buy back 1.97 million Avalanche tokens it previously sold to the Luna Foundation Guard (LFG). This news comes after the collapse of the Terra blockchain ecosystem.

    Avalanche Foundation is set to buy the tokens for $45.5 million, even though they’re valued at $57.4 million in the market. The tokens are being bought from Terraform Labs’ bankruptcy estate.

    A proposal to purchase the tokens is currently being reviewed by a Delaware Bankruptcy Court. The Avalanche Foundation confirmed this news in a post on October 11.

    Avalanche Foundation reassured that buying back the tokens will prevent any violations of the original agreement related to the use of the tokens and keep the tokens away from potentially complex liquidation proceedings. The action will add 1.97M AVAX back to the Avalanche Foundation’s holdings.

    Interestingly, the 1.97 million Avalanche tokens on offer are now worth 42% less than the $100 million LFG forked out for them in April 2022.

    Terraform Labs says the move to settle this matter will keep litigation costs low and ensure more assets are left to be shared among its creditors. The firm is also confident that the deal will allow it to retrieve an amount close to the current market value of the 1.97 million AVAX Tokens.

    LFG, a nonprofit entity, was put in charge of creating and monitoring reserves for Terra’s algorithmic stablecoin TerraClassicUSD (USTC), which LFG used to purchase the AVAX tokens.

    But things took a turn for the worse less than a month later when USTC lost its peg with the US dollar and fell to just $0.006.

    Terraform Labs had also traded $100 million worth of Terra Luna Classic (LUNC) for AVAX in April to “strategically align ecosystem incentives”. But the collapse wiped almost $60 billion from LUNC and USTC’s market caps, according to data from CoinGecko.

    The proposal to repurchase the tokens followed the approval of a Delaware bankruptcy judge in last month for Terraform Labs’ decision to wind down its operations after settling with the Securities and Exchange Commission for $4.5 billion in June.

    Reports suggest Terraform may end up paying from $185 million up to $442 million as part of the shutdown plan — but it’s unclear how much the firm’s total losses will end up being.

    Source: Cointelegraph

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