As a seasoned researcher with a keen eye for blockchain developments and a knack for deciphering complex financial transactions, I find the Avalanche Foundation’s decision to repurchase its tokens from Luna Foundation Guard (LFG) intriguing. It’s like a game of chess where the pieces are not just moved but also reclaimed, albeit at a lower value than originally paid.
The Avalanche Foundation plans to buy back approximately 1.97 million Avalanche tokens that it had previously sold to the Luna Foundation Guard (LFG) in April 2022, just a month prior to the collapse of the Terra blockchain ecosystem.
The Avalanche Foundation is set to acquire 1.97 million AVAX tokens, valued at $45.5 million during the purchase but equating to approximately $57.4 million in current market value, from the bankruptcy assets of Terraform Labs.
On October 11, the Avalanche Foundation announced through a blog post that a repurchase agreement and settlement from October 9 is currently awaiting court approval in a Delaware Bankruptcy Court.
The foundation, supporting the Layer 1 blockchain Avalanche, stated that this action maintains compliance with the original agreement’s constraints regarding token usage and safeguards the tokens from the intricacies of a bankruptcy trustee liquidation, all while returning approximately 1.97 million AVAX back to the foundation’s assets.
97 million Avalanche tokens, which were purchased for $100 million in April 2022, have dropped by 42%.
According to Terraform Labs’ filing, the agreement aims to lower legal expenses and preserve more assets for potential creditor distribution by reducing litigation costs.
Terraform Labs mentioned that the recovery plan aims to bring back nearly the current market value of approximately 1.97 million AVAX Tokens.
The total sum was calculated using the average price of AVAX tokens, which was determined by their trading volume during a seven-day span in early August 2024.
The charitable group, named LFG, was assigned the responsibility of constructing and managing savings accounts specifically designed for Terra’s digital coin, TerraClassicUSD (USTC). Subsequently, they utilized these reserves to procure the AVAX collection.
Within about a month’s time, USTC decoupled from the US dollar and dropped down to as little as $0.006.
In April, the company responsible for the layer 1 blockchain Terra, known as Terraform Labs, exchanged approximately $100 million of Terra Luna Classic (LUNC) for AVAX. This move was made to tactically coordinate incentives within their ecosystem.
Approximately $60 billion was lost in market value for LUNC and USTC after their collapses, according to information from CoinGecko.
Last month, a Delaware bankruptcy court granted approval for Terraform Labs’ decision to discontinue its business activities, which came after it reached a $4.5 billion settlement with the Securities and Exchange Commission in June. This move paves the way for repurchase agreements.
According to reports, Terraform proposed a potential payment ranging from $185 million to $442 million in the process of its shutdown. However, the exact amount of its losses proved difficult to determine.
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2024-10-14 05:56