Flow Foundation Executes 50M Token Burn, Vows 50M Market Buyback

The Flow Foundation announced that it has burned 50 million FLOW tokens and plans to buy back the same amount from the open market. This action completes the process of resolving issues following a security breach on December 27, 2025, when an attacker exploited a vulnerability in the Cadence runtime to create fake tokens.

With these actions, the foundation aims to remove leftover counterfeit assets that circulated through decentralized exchanges. The move also helps it to balance the token supply and rebuild confidence in the ecosystem during a difficult market.

Flow Foundation’s Remediation Strategy

On December 27, an incident led to the unauthorized creation of fake FLOW tokens. In response, validators paused the network temporarily and worked together to recover without rolling back the entire blockchain, addressing community concerns about decentralization. Exchanges blocked fraudulent deposits, allowing most of the fake tokens to be recovered. 

In January, two on-chain burns took place, destroying a large number of the seized counterfeit tokens. Additionally, a significant event on January 30 resulted in the elimination of 87.4 billion fraudulent units under the Community Governance Council’s oversight. The latest burn aims to address the remaining issue of 50 million fake tokens mixed in with legitimate ones during attacks on decentralized exchanges.

To counteract any dilution effects, the foundation plans to buy and destroy an equivalent number of real tokens. This also helps keep transaction histories unchanged. The process includes ongoing market purchases to improve liquidity and plans to adjust the protocol to address net deflation. 

Broader Crypto Downturn

The price of FLOW dropped sharply in early 2026, falling from about $0.45 in September 2025 to around $0.035 by late February. This decline reflected a loss of investor confidence after a security breach. Major exchanges reacted by imposing restrictions, with Upbit fully delisting FLOW trading pairs on March 16 due to ongoing security concerns. 

This reduced trading volume and increased price volatility. Meanwhile, the overall crypto market faced challenges, including Bitcoin’s nearly 20% year-to-date decline. The drop is driven by institutions reducing exposure, ETF outflows exceeding $1 billion in recent weeks, and broader economic uncertainties. 

Crypto liquidity has reached its lowest levels in years, leading to greater price volatility across assets. Analysts are cautious about FLOW’s future. The token currently trades around $0.04, unless new factors emerge. The burn-and-buyback strategy aims to control supply, but market sentiment still favors caution over deflationary measures.

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