Avalanche regains control of 52 million AVAX tokens, defusing Terra's chip swap bomb

The Avalanche Foundation announced on 11/1 that it has successfully repurchased approximately 1.97 million AVAX tokens worth $52 million, following court approval. These tokens were initially sold to Luna Foundation Guard (LFG) at the beginning of 2022, an organization founded by Do Kwon, the founder of Terraform Labs, to prevent the collapse of the UST/LUNA token pricing mechanism.

The Consequences of Avalanche Token Swap

Before the collapse of the UST stablecoin, Do Kwon introduced LFG as an intermediary and claimed to purchase over $10 billion worth of Bitcoin and other cryptocurrencies as reserve assets, including $100 million worth of AVAX tokens included in LFG's balance sheet at the time. The Avalanche Foundation held $200 million worth of UST and LUNA tokens, with the aim of strengthening their ecosystems through coordination.

Following the collapse of UST, the Avalanche Foundation continued to seek repurchase of AVAX tokens and finally obtained approval from the bankruptcy court on 11/1. Avalanche CEO Aytunç Yildizli stated, "We are pleased to have completed this repurchase, representing our commitment to the sustainable development of the Avalanche ecosystem." The repurchased AVAX tokens by Avalanche will be used to support community grants, incubate projects, and various activities to accelerate technological and ecosystem development.

On the other hand, Do Kwon is currently detained in Montenegro, with extradition requests from the United States and South Korea pending.