The Avalanche Foundation is taking decisive action to repurchase nearly 2 million AVAX tokens sold to the Luna Foundation Guard (LFG) in April 2022, just before Terra's catastrophic collapse. The foundation plans to buy back the tokens for $45.5 million, even though they are now worth $57.4 million in the open market.

This strategic repurchase, filed in Delaware Bankruptcy Court on Oct. 9, is still pending approval. The foundation emphasized that the move protects these tokens from potential misuse during Terraform Labs' bankruptcy proceedings, ensuring they don't get caught up in liquidation complexities. Additionally, this action returns the 1.97 million AVAX tokens to Avalanche’s holdings.

Back in April 2022, LFG purchased these tokens for a staggering $100 million, but the value has since plummeted by 42%. The agreement helps minimize legal costs and recover nearly the full current market value of the tokens, according to Terraform Labs.

The deal's pricing was based on the average AVAX token price from a seven-day period in early August 2024. LFG, a nonprofit, originally bought the tokens to back Terra’s algorithmic stablecoin, TerraClassicUSD (USTC), which collapsed shortly after. Terra's downfall led to the wipeout of nearly $60 billion from the market.

This repurchase agreement follows Terraform Labs’ decision to wind down its operations after a $4.5 billion settlement with the SEC, leaving behind significant financial losses.

The Avalanche Foundation's move signals a strategic step in protecting its assets while navigating the fallout from one of the most notorious collapses in crypto history.