The Avalanche Foundation has bought back $52 million worth of AVAX tokens from the defunct Luna Foundation Guard (LFG), ending the losses caused by the collapse of TerraUSD. The buyback, approved by the bankruptcy court, is a significant milestone for the Avalanche Foundation and serves as an instructive story for the entire crypto sector.
The Luna Foundation Guard was created to support the TerraUSD (UST) stablecoin, and as part of this, the Avalanche Foundation agreed to place $100 million worth of AVAX tokens in LFG’s ownership. However, the TerraUSD collapse caused huge losses for both parties involved. The Avalanche Foundation’s successful negotiation to repurchase the AVAX tokens marks a positive step for the foundation and frees it from the risks associated with the Terra ecosystem collapse.
This buyback highlights the importance of security mechanisms in the crypto world, especially in the field of algorithmic stablecoins. The TerraUSD collapse also led to the bankruptcy of several major companies and contributed to the overall demand for better regulation in the crypto sector.
