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Avalanche Says Luna Foundation Guard Has 'Disclosed No Plans' for AVAX Tokens

www.coindesk.com 19 May 2022 22:20, UTC
Reading time: ~2 m

Avalanche, a smart-contract blockchain, said in a tweet that Luna Foundation Guard (LFG) – the entity behind the reserve fund set up to backstop the Terra blockchain's now-failed UST stablecoin – has “disclosed no plans” for the 2 million AVAX tokens currently sitting in its treasury.

"Given the proposed Terra chain fork, LFG has disclosed no plans to use the AVAX," according to the tweet. “Should any sales be contemplated for the LFG reserves, the Avalanche Foundation is ready to work with LFG on a sensible trading strategy.”

With the token's price fluctuating at $30 per token, the market value of the AVAX stash is about $60 million, making it the second-largest holding in LFG’s dwindling $240 million treasury.

Avalanche said in the tweet that it provided the update because "some members of the Avalanche Community have inquired about details around the $AVAX reserves."

Crypto traders have speculated on what the plans were for the AVAX tokens – and what the market impact might be from any sales.

The announcement comes as entities with strong ties to the Terra ecosystem, including the $8 billion layer 1 blockchain Avalanche, are facing demands for transparency from the community as they reckon with the market events of last week.

Additionally, Avalanche revealed Terra blockchain developer Terraform Labs (TFL), holds 1.1 million AVAX tokens in another tweet.

TFL’s tokens are subject to a one-year lock up, according to the tweet.

The AVAX tokens held by TFL and LFG represented 0.5% and 0.9% of the token’s weekly volume, according to Avalanche.

"The AVAX is currently immobilized," according to the tweet.

CoinDesk reported in April that the Luna Foundation Guard and Terraform Labs – both organizations supporting the Terra blockchain – announced they had collectively acquired $200 million worth of Avalanche’s AVAX tokens from the Avalanche Foundation.

In exchange, the Avalanche Foundation received $100 million worth of LUNA from Terraform Labs and $100 million worth of the stablecoin UST from Luna Foundation Guard.

As of Thursday afternoon, LUNA was trading at less than 1 cent and UST at 8 cents, marking a dramatic decline in the tokens’ value. Thursday's tweet did not address the status of the Avalanche Foundation's Terra-related tokens.

A spokesperson for Avalanche did not immediately respond to a request for comment.

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