Avalanche Foundation to repurchase tokens sold to Terra's LFG in 2022 deal, pending court approval

In April 2022, the Luna Foundation Guard, a Singapore-based nonprofit which supported the since-collapsed Terra ecosystem with its stablecoin UST and token LUNA, purchased $100 million worth of Avalanche's AVAX tokens in order to bolster its reserves. UST was the fourth-largest stablecoin at the time, The Block previously reported. 

However, the Terra ecosystem's collapse in May 2022 put the future of the AVAX tokens it holds into question. Now, the Avalanche Foundation has announced that it has negotiated a deal to repurchase the 1.97 million tokens from Terraform Labs' bankrupt estate.

"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," the Avalanche Foundation wrote in its announcement post on X. 

While the Foundation didn't include the financial terms of the deal in its announcement, the current value of 1.97 million Avalanche tokens is about $56 million at list price, a 44% decrease from the stash's original $100 million value. 

The agreement will be enacted pending approval from the bankruptcy court in charge of Terraform Labs' estate, according to the announcement. A bankruptcy judge approved Terraform Labs’ move to wind down its operations in September following the settlement of its case with the SEC, The Block previously reported. 

The price of Avalanche's token, which was as low as $25.16 on Oct. 10, has since risen over 13% to about $28.50 following the announcement and the growing popularity of the new video game Off The Grid, which has an in-game economy built on an Avalanche Subnet, according to The Block's Avalanche Price Page.