The Avalanche Foundation has completed the repurchase of $52 million worth of AVAX tokens from the Luna Foundation Guard. This marks the end of Avalanche's relationship with the collapsed Terra blockchain. With permission from the bankruptcy court, the Avalanche Foundation repurchased 1.97 million AVAX tokens. This repurchase aims to support the development of the Avalanche ecosystem, including funding, incubators, and community activities. Do Kwon and Terraform Labs were previously held liable for $4.47 billion in civil damages for defrauding investors.

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The Avalanche Foundation is closing the book on its relationship with collapsed blockchain Terra after over two years. According to an announcement on Thursday, the foundation has finished repurchasing AVAX tokens from the Luna Foundation Guard, the organization spun up by Terraform Labs creator Do Kwon to prevent exactly the type of death spiral that eventually did in the failed algorithmic stablecoin TerraUSD (UST).In 2022, Kwon launched LFG (a play on the internet slang “Let's Freaking Go!”) as an intermediary that would buy upwards of $10 billion worth of bitcoin and other crypto assets, including AVAX, to act as a strategic reserve for his then popular — though ultimately unstable — stablecoin.Part of that strategy involved two deals that put $100 million worth of AVAX tokens on LFG’s balance sheet and $200 million worth of UST and its associated token LUNA on the Avalanche Foundation’s. UST was supposed to maintain a peg to the U.S. dollar via a mechanism that either burned or bought LUNA, which had a free-floating price.Although the relationship was meant to “strategically align incentives” between the blockchain ecosystems, Avalanche, like nearly everything that touched Terra, got burned. Since the demise of Kwon’s UST, the Avalanche Foundation has been working to buy back its tokens.The non-profit was only recently granted permission to do the repurchases by the bankruptcy court, enabling it to buy back 1.97 million AVAX tokens valued at around $52 million at today’s prices, it said in a statement. AVAX was changing hands at around $26.5 Wednesday, according to The Block’s price page.“We’re pleased to finalize this repurchase, which underscores our ongoing commitment to the development of the Avalanche ecosystem,” said Aytunç Yildizli, CEO and executive director of the Avalanche Foundation. He noted the funds would go to support grants, incubators and events to drive community and technological development.An Avalanche spokesperson echoed this point, telling The Block that the token buyback is “an important step in [the foundation’s] ongoing efforts to support the growth and sustainability of the Avalanche ecosystem.”In June 2024, Kwon and Terraform Labs agreed to a $4.47 billion civil settlement with the U.S. Securities and Exchange Commission after a jury found the two liable for defrauding investors. The collapse of TerraUSD is often cited as the beginning of the market contagion event in 2022 that brought down firms such as hedge fund Three Arrows Capital, lending app Celsius and the FTX crypto exchange.Kwon has been detained in Montenegro since March 2023. Both the United States and South Korea have requested his extradition.

The Avalanche Foundation repurchased 52 million USD worth of AVAX tokens, ending its relationship with Terra.