The Avalanche Foundation seeks court approval to repurchase the AVAX tokens it sold to the Luna Foundation Guard (LFG) in 2022. This move aims to secure the foundation’s liquidity while preventing LFG from potentially dumping the tokens on the open market during bankruptcy proceedings. Both parties have agreed to the repurchase deal, which is now awaiting approval from the court.
The foundation ensures that LFG complies with the original terms when selling the tokens. LFG was initially required to use the AVAX tokens as reserve assets. However, due to its ongoing financial troubles, there are concerns the tokens might be liquidated, which the Avalanche Foundation wants to avoid. By repurchasing the 1.97 million AVAX tokens, the foundation aims to prevent market disruption and uphold the agreement’s original conditions.
Court approval sought to protect market stability
The Avalanche Foundation has emphasized that the repurchase is critical to protecting its token’s market value. If the tokens were to be liquidated in bankruptcy, there could be a significant negative impact on AVAX prices. By buying back the tokens, Avalanche aims to maintain stability and keep its market performance on track. Additionally, the foundation stated this move will support its efforts to grow and further develop the Avalanche network.
The foundation reiterated its commitment to preserving the agreement’s integrity with LFG. Their decision to intervene before a potential liquidation under a bankruptcy trustee demonstrates a proactive approach to shielding the token from unnecessary market volatility.
AVAX token sees a 10% surge in value
News of the Avalanche Foundation’s planned repurchase has had an immediate positive effect on the value of AVAX. In the past 24 hours, the token has surged by nearly 10%, making it one of the top-performing cryptocurrencies in that period. The market responded favorably to the foundation’s efforts to prevent a large-scale sell-off, boosting investor confidence.
This price spike comes after months of poor performance for AVAX. Despite the recent gain, AVAX remains down by 30% year-to-date, reflecting the struggles faced in 2024. The foundation has also launched new initiatives like the Retro9000 grant program to bolster the network’s growth further, and these developments have contributed to positive sentiment around the token. The upcoming Avalanche 9000 upgrade is also anticipated to enhance the platform significantly, which could further stabilize and elevate the token’s performance.
Avalanche AVAX Price Performance (Source: Tradingview)
Terraform Labs faces potential shutdown of crucial services
Terraform Labs, the company behind the now-defunct Terra Luna project, is preparing to shut down several critical services by the end of October. The shutdown comes after Terraform Labs agreed to a $4.7 billion settlement with the U.S. Securities and Exchange Commission (SEC). Terraform Labs may wind down some of its core products, including Warp protocol, Enterprise DAO, Station Wallet, and others, as part of the agreement.
Services like the Finder Block Explorer and Luna Foundation Guard could be terminated if third-party buyers cannot be found. This development raises concerns among the Terra Luna community, as services like Station Wallet play a crucial role in the chain’s self-custody and staking operations. With uncertainty looming, the community may need to take over some critical functions to keep the network running effectively. Despite efforts by the community to revitalize the project through Luna Classic and Terra Classic, Terra Luna has struggled to regain its former prominence since its collapse in 2022.
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