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AVAX One faces tighter liquidity rule excluding its Avalanche tokens

The lender raised AVAX One’s minimum liquidity requirement to $3.5 million, pays out through faster debenture redemptions and potentially greater share dilution via a deeper debt-to-equity conversion discount.

Reported · Written up by our desk · Market Structure

An unnamed institutional investor has tightened the debt terms for Nasdaq-listed crypto treasury company AVAX One, boosting its minimum liquidity requirement 3,400% to $3.5 million, while excluding Avalanche (AVAX) tokens from counting toward the threshold, according to a Aug. 5 SEC filing described by CryptoSlate.

The restructuring follows CEO Jolie Kahn’s July departure, which triggered a key-person covenant default. AVAX One paid $1.3 million and the lender waived the breach, but only bank cash and Bitcoin held in custody are recognized under the amended covenant.

CryptoSlate reports AVAX One holds nearly 14 million AVAX tokens worth about $88 million, though the filing indicates those tokens cannot satisfy the new liquidity test regardless of market value. The company also faces a 180-day deadline from Kahn’s exit to appoint a permanent CEO acceptable to the lender, with Peter Wylie Jr. serving as interim chief executive.

As part of a broader restructuring, AVAX One retired $6.8 million in outstanding principal debentures and adjusted remaining debenture terms, increasing the remaining principal to $8.47 million from $7.7 million after the payment. The lender accelerated monthly redemptions to one-tenth of the original principal from one-twenty-fifth and reduced the accelerated conversion price to 82.5% from 85% of a benchmark tied to the three lowest trading prices over the prior 10 trading days, a change that could increase dilution for existing investors.

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