According to an announcement Thursday, Avalanche Foundation has completed the purchase of AVAX tokens from the Luna Foundation Guard, an organization created by Terraform Labs creator Do KWON to prevent exactly the type of death spiral that ultimately occurred with the failed algorithmic stablecoin TerraUSD (UST). In 2022, Kwon launched LFG as a broker that would buy more than $10 billion worth of bitcoin and other crypto assets, including AVAX, to act as a strategic reserve for his then-popular stablecoin.
Part of that strategy involved two deals that placed $100 million worth of AVAX tokens on LFG’s balance sheet and $200 million worth of UST and its associated LUNA token on the Avalanche Foundation’s balance sheet. UST was supposed to maintain a peg to the U.S. dollar through a mechanism that either burned or bought LUNA, which had a free-floating price. Since the demise of Kwon’s UST, the Avalanche Foundation has been working to buy back its tokens.
The nonprofit just recently received a buyback permit from a bankruptcy court, allowing it to buy back 1.97 million AVAX tokens, worth about $52 million at today’s prices, the statement said. According to The Block’s price page, AVAX was changing hands at about $26.50 on Wednesday. The Avalanche Foundation CEO and executive director noted that the funds will support grants, incubators, and events to spur community and technology development.
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