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Fallen blockchain ecosystems such as Terra have caused devastating blows to the industry; however, the process of recovering those assets has begun helping those who lost their funds. 

The Avalanche Foundation announced on the X platform that it has negotiated an agreement to repurchase all the AVAX tokens it sold to Luna Foundation Guard (LFG) in April 2022. The crypto firm claimed they will be repurchasing 1.97 million AVAX tokens for $45.5 million from the Terraform Labs.

The agreement has been filed, and it is awaiting approval from the US bankruptcy court in the District of Delaware. 

With the aim of supporting the development of the Avalanche ecosystem, the foundation stated, “This action ensures that LFG would not violate the original agreement’s restrictions on the tokens’ use and shields the tokens from the complexity of a bankruptcy trustee liquidation, while returning 1.97 million AVAX to the Foundation’s holdings. ”

According to the court filings, Avalanche had concerns the transfer may be fraudulent, which is one of the reasons behind the settlements. 

“Absent entry into the AVAX settlement, the Debtors (and now the Plan Administrator) face significant potential challenges to monetizing the AVAX tokens by selling them on the open market in light of Avalanche’s assertions and threatened litigation.”

The settlement also hopes to avoid further litigation or legal complications regarding the AVAX repurchasing transfer and resolve the liquidation plan more efficiently.