Avalanche Reclaim $45M in AVAX Tokens From Terra: Here’s What to Know

The Avalanche Foundation is set to repurchase 1.97 million AVAX from Terraform Labs. Amid this, AVAX price is approaching a key resistance level – will it breakout on the news?

2022 was a tumultuous year. Bitcoin, Ethereum, Avalanche, and other top altcoins crashed.

At one point, Solana, which is now trading at above $140, fell to as low as $8.

The extended bear market and the deleveraging followed the rally that took Bitcoin to over $69,000 and AVAX, the native token of Avalanche, above $140.

However, following the brutal rally in 2022, AVAX Price Trading volume in 24h Last 7d price movement was among the top losses, shedding over -90% after falling to as low as $11.

The Collapse Of LUNA and UST: Why It Ripples in Market Today

Apart from crypto prices, the winter also saw hedge funds and exchanges collapse, declaring bankruptcy.

While FTX was a highlight, the ship began to fall when UST, Terra’s algorithmic stablecoin, began de-pegging.

Later, LUNA Price Trading volume in 24h Last 7d price movement , which backed the token, also crashed, taking down the Luna Foundation Guard (LFG) in April 2022.

The LFG existed to back the UST, ensuring it remains at par with the USD. Among other assets the LFG held to back UST included Bitcoin.

A month before LFG collapsed, the Avalanche Foundation had sold 1.97 million AVAX worth $100 million to the organization.

Avalanche Foundation To Repurchase 1.97 Million AVAX From LFG

Over two years later, the Avalanche Foundation plans to repurchase the stash from LFG for $45.5 million as part of a settlement agreement with Terraform Labs.

The purchase price represents a discount, considering the spot value for the 1.97 million is around $58 million. It is even cheaper than the $100 million the LFG bought it for in early 2022.

Positive as this may be, the agreement is pending approval from the Delaware bankruptcy court.

The foundation wants to buy this stash from Terraform Labs and the defunct LPG to protect AVAX holders from the complexities involved in the ongoing bankruptcy proceedings.

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Terraform Labs Shutting Down: Impact on AVAX Price Action

If approved, funds received will help Terraform Labs reduce its legal costs while conserving assets it plans to eventually distribute to creditors.

Terra Labs agreed to settle with the United States SEC for $4.5 billion and is required to wind down operations.

Although Terraform Labs says it was hard to estimate the exact loss after the Luna ecosystem collapsed, it ought to pay creditors between $185 million and $442 million before closing shop.

( AVAXUSDT )

AVAX is up, approaching highs of around $30 in September, with fresh footing above the 20DMA providing enhanced technical structure.

A decisive close above $35 might trigger more demand, lifting prices to $60 in the coming months.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.