Month: April 2025

(Reuters) -U.S. President Donald Trump on Thursday signed into law a bill to overturn a revised rule from the Internal Revenue Service that expanded the definition of a broker to include decentralized cryptocurrency exchanges, according to a statement from the White House.

In the last weeks of the Biden administration in December, the IRS updated its crypto tax reporting rule that it had finalized earlier in 2024 to clarify that its new guidelines would also apply to decentralized finance – or DeFi – exchanges.

Both the House of Representatives and the Senate in March voted to nullify the revision through the Congressional Review Act, which allows Congress to reverse new federal rules with a simple majority.

The cryptocurrency industry had slammed the revised rule, claiming that it was unworkable for DeFi platforms, and called on Republicans to rescind it.

Centralized exchanges such as Coinbase and Kraken act as the intermediary between buyers and sellers, while DeFi exchanges aim to cut out the middleman and allow users to transact directly on a blockchain network, which powers cryptocurrencies.

Crypto industry participants argued that because DeFi exchanges don’t act as intermediaries, they don’t have visibility into who their users are, making it impossible to comply with the IRS rules.

The new IRS framework finalized last year aimed to crack down on crypto users who may be failing to pay their taxes, and stemmed from the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act. It required digital asset brokers to send the forms to both the IRS and digital asset holders to assist with their tax preparation.

Trump on the campaign trail pledged to be a “crypto president” and courted cash from the industry by promising to promote the adoption of digital assets.

In his first week in office, Trump ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations, and in March signed an executive order to create a federal stockpile of bitcoin.

(Westlaw) The SEC’s Division of Corporate Finance issued a statement providing guidance on the application of disclosure requirements under the Securities Act and the Exchange Act to offerings and registrations of securities in the crypto asset markets.

On April 10, 2025, the SEC‘s Division of Corporate Finance (the Division) issued a statementOpens in a new window providing guidance on the application of disclosure requirements under the Securities Act and Exchange Act to offerings and registrations of securities in the crypto asset markets.

The statement reflects the Division’s observations of disclosures made in response to existing requirements, as well as its views regarding:

• Specific disclosure questions market participants have presented to Division staff.
• Certain disclosure requirements under Regulation S-K as they apply to Securities Act and Exchange Act registration forms, such as Form S-1 and Form 10, respectively.
• The disclosure requirements of Form 20-F used by foreign private issuers.

Disclosure items the statement addresses in the context of offerings and registrations of securities in the crypto asset markets include:

• Description of business.
• Risk factors.
• Description of securities, including:
  • rights, obligations, and preferences;
  • technical specifications; and
  • supply.
• Directors, executive officers, and significant employees.
• Financial statements.
• Exhibits.

The Division encourages issuers to contactOpens in a new window the Division with questions or other assistance about the application of the SEC’s disclosure rules and reporting obligations.

The statement is the latest effort by the SEC to provide clarity and guidance on the application of federal securities laws to the crypto asset markets. In January 2025, Acting SEC Chair Mark Uyeda announced the formation of a crypto task force dedicated to the development of a clear regulatory framework for crypto assets (see Legal Update, SEC Announces Formation of Crypto Task Force). Shortly after the release of the Division’s statement, Commissioner Hester Peirce, who leads the SEC’s crypto task force, issued a separate statementOpens in a new window addressing the importance of the Division’s guidance and the types of issuers it might help.

Big Tech Docket: Meta in court for Instagram, WhatsApp acquisitions

(Westlaw) Meta faces trial for alleged anticompetive activity, while Elon Musk’s unprecedented access to sensitive government data continues to raise alarms.

Here’s a roundup of recent events in the world of Big Tech.

Zuckerberg takes the stand

Despite Mark Zuckerberg’s efforts to lobby President Donald Trump to settle the government’s antitrust case against Meta Platforms Inc., the tech titan found himself on the witness stand facing the Federal Trade Commission’s questions April 14. According to the FTC, Meta engaged in anticompetitive behavior when it bought Instagram and WhatsApp to ward off competitors. A ruling against Meta could result in a forced divestiture of the two apps. Federal Trade Commission v. Meta Platforms Inc., No. 20-cv-3590 (D.D.C.).

DOGE data access, alleged breach

Two recently fired Democratic FTC commissioners are questioning exactly what FTC data Elon Musk’s Department of Government Efficiency has access to and who is looking at it, Reuters reports. Former Commissioners Rebecca Slaughter and Alvaro Bedoya made a statement expressing concerns that nonpublic financial data and company data such as that reported by Musk’s business rivals is not being handled securely, noting that “this data can move markets.” Slaughter and Bedoya are also suing over their dismissals.

An information technology worker at the National Labor Relations Board has notified nonprofit Whistleblower Aid that a “significant cybersecurity breach” may have occurred at the agency. Whistleblower Aid used the insider info to file a complaint to the Senate Intelligence Committee alleging that DOGE team members tampered with user protocols and later removed a chunk of data from the NLRB’s network. According to Reuters, the staffer testified that his superiors stymied his attempt to report the alleged breach.

Banks allegedly infringing data security patents

Technology company DigitalDoors Inc., which has filed dozens of patent infringement lawsuits against financial institutions, has now targeted New York City-based Metropolitan Commercial Bank. In a complaint filed in Manhattan federal court, the company alleges that the data security software the bank uses mimics patented systems. Like the other suits, this one alleges infringement of patents that describe processes to protect and retrieve sensitive digital information. The complaint says Metropolitan has a policy of being “willfully blind” to what patented technologies are available when it implements a data security system and instructs its employees “to not review the patents of others for clearance or to assess infringement thereof.” DigitalDoors Inc. v. Metropolitan Community Bank, No. 25-cv-2891, complaint filed, 2025 WL 1047473 (S.D.N.Y. Apr. 8, 2025).

Digital hunt for protesters

Having labeled pro-Palestinian speech as “antisemitic,” the Trump administration now turns the Department of Homeland Security’s resources to trawling immigrants’ social media posts to deny or withdraw legal status based on any such speech. Human rights advocates, including some Jewish groups, have condemned the action, saying it mislabels criticism as antisemitism, according to Reuters.

Yahoo data collection alleged

Yahoo Inc. has been secretly collecting and monetizing user data from hundreds of millions of U.S. residents, according to two lawsuits filed in Manhattan federal court. Both suits say that Yahoo’s ConnectID program not only identifies users without their knowledge or consent, but also profiles them and allows the company to profit from selling the information to advertisers. Caplan v. Yahoo Inc., No. 25-cv-2943, complaint filed (S.D.N.Y. Apr. 9, 2025); Baker v. Yahoo Inc., No. 25-cv-2797, complaint filed (S.D.N.Y. Apr. 3, 2025).

Clearance vengeance

Trump has retaliated against a cybersecurity company for hiring one of his former appointees who refused to back up the false claim that the 2020 presidential election was stolen. The president canceled the security clearances of SentinelOne Inc. on April 9 after it hired Chris Krebs as its chief intelligence and public policy officer. Krebs headed the Cybersecurity and Infrastructure Security Agency during Trump’s first term and was fired over Twitter when he said Trump had lost the election. According to Reuters, the largest cybersecurity companies refused to comment on the move.

John Fitzgerald contributed to this article.

By Kteba Dunlap, Esq.

SEC Closes Investigation Into NFT Gaming Project CyberKongz

(Syndigate) Gaming NFT CyberKongz called its legal fight a stand for Web3 and said a full rebrand and new direction will be revealed soon. Last updated: April 16, 2025 01:24 EDT Crypto Reporter Shalini Nagarajan Crypto Reporter Shalini Nagarajan About Author

Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

Author Profile Share Copied Last updated: April 16, 2025 01:24 EDT Why Trust Cryptonews Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas – from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

The US Securities and Exchange Commission has formally closed its investigation into CyberKongz, a prominent Ethereum-based NFT and gaming project, with no enforcement action taken, the team announced on Tuesday.

CyberKongz described the decision as a landmark moment, ending what it called years of “unjust allegations, crippling legal fees, and the biggest hurdle we could possibly encounter.” The project, known for its pixelated primate avatars and immersive metaverse-style gaming experiences, had become a symbol of regulatory uncertainty in the Web3 space.

In December, CyberKongz received a Wells notice from the SEC, which the project said reflected a confusing stance on how smart contracts function.

One of the main issues raised by the regulator was the alleged sale of Genesis Kongz in April 2021. However, the team clarified this was not a token sale but a contract migration. They argued that if the SEC cannot tell the difference between a primary sale and a technical update, it raises serious concerns about the clarity of current crypto regulations.

SEC’s Enforcement Eases Following Trump’s Return

The announcement comes as the SEC begins to ease its posture toward crypto companies.

In line with this shift, the agency has recently paused or dropped several high-profile investigations. These include cases involving Coinbase, Kraken, Robinhood, Immutable and Consensys. At the same time, some probes, like those into Binance and OpenSea, remain open. However, the overall trend points to a softer enforcement approach than in previous years.

This shift in approach coincides with a political transition in Washington. The second Trump administration took office in January, followed by the resignation of SEC Chair Gary Gensler.

Days later, the agency launched a new Crypto Task Force to develop clearer rules for the industry, marking a turn toward regulatory clarity and collaboration.

CyberKongz Says Victory Signals Hope for Builders Across Web3

CyberKongz was founded by a group of artists and developers. It first gained traction in 2021 during the NFT boom. The project featured uniquely generated gorilla avatars that attracted a cult following. It later expanded into a larger gaming and metaverse ecosystem. The team described its legal battle as a stand for the entire Web3 space, not just itself.

“We are a small, passionate, and creative Web3 team that elected to fight this battle for the betterment of Web3,” the project said. A full rebrand and new direction will be announced soon, it added.

The case is now closed. CyberKongz said it hopes the outcome will inspire other blockchain projects to keep building with confidence. “It should be celebrated by all that our space is here to stay,” the team said.

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(Westlaw) Meta faces trial for alleged anticompetive activity, while Elon Musk’s unprecedented access to sensitive government data continues to raise alarms.

Here’s a roundup of recent events in the world of Big Tech.

Zuckerberg takes the stand

Despite Mark Zuckerberg’s efforts to lobby President Donald Trump to settle the government’s antitrust case against Meta Platforms Inc., the tech titan found himself on the witness stand facing the Federal Trade Commission’s questions April 14. According to the FTC, Meta engaged in anticompetitive behavior when it bought Instagram and WhatsApp to ward off competitors. A ruling against Meta could result in a forced divestiture of the two apps. Federal Trade Commission v. Meta Platforms Inc., No. 20-cv-3590 (D.D.C.).

DOGE data access, alleged breach

Two recently fired Democratic FTC commissioners are questioning exactly what FTC data Elon Musk’s Department of Government Efficiency has access to and who is looking at it, Reuters reports. Former Commissioners Rebecca Slaughter and Alvaro Bedoya made a statement expressing concerns that nonpublic financial data and company data such as that reported by Musk’s business rivals is not being handled securely, noting that “this data can move markets.” Slaughter and Bedoya are also suing over their dismissals.

An information technology worker at the National Labor Relations Board has notified nonprofit Whistleblower Aid that a “significant cybersecurity breach” may have occurred at the agency. Whistleblower Aid used the insider info to file a complaint to the Senate Intelligence Committee alleging that DOGE team members tampered with user protocols and later removed a chunk of data from the NLRB’s network. According to Reuters, the staffer testified that his superiors stymied his attempt to report the alleged breach.

Banks allegedly infringing data security patents

Technology company DigitalDoors Inc., which has filed dozens of patent infringement lawsuits against financial institutions, has now targeted New York City-based Metropolitan Commercial Bank. In a complaint filed in Manhattan federal court, the company alleges that the data security software the bank uses mimics patented systems. Like the other suits, this one alleges infringement of patents that describe processes to protect and retrieve sensitive digital information. The complaint says Metropolitan has a policy of being “willfully blind” to what patented technologies are available when it implements a data security system and instructs its employees “to not review the patents of others for clearance or to assess infringement thereof.” DigitalDoors Inc. v. Metropolitan Community Bank, No. 25-cv-2891, complaint filed, 2025 WL 1047473 (S.D.N.Y. Apr. 8, 2025).

Digital hunt for protesters

Having labeled pro-Palestinian speech as “antisemitic,” the Trump administration now turns the Department of Homeland Security’s resources to trawling immigrants’ social media posts to deny or withdraw legal status based on any such speech. Human rights advocates, including some Jewish groups, have condemned the action, saying it mislabels criticism as antisemitism, according to Reuters.

Yahoo data collection alleged

Yahoo Inc. has been secretly collecting and monetizing user data from hundreds of millions of U.S. residents, according to two lawsuits filed in Manhattan federal court. Both suits say that Yahoo’s ConnectID program not only identifies users without their knowledge or consent, but also profiles them and allows the company to profit from selling the information to advertisers. Caplan v. Yahoo Inc., No. 25-cv-2943, complaint filed (S.D.N.Y. Apr. 9, 2025); Baker v. Yahoo Inc., No. 25-cv-2797, complaint filed (S.D.N.Y. Apr. 3, 2025).

Clearance vengeance

Trump has retaliated against a cybersecurity company for hiring one of his former appointees who refused to back up the false claim that the 2020 presidential election was stolen. The president canceled the security clearances of SentinelOne Inc. on April 9 after it hired Chris Krebs as its chief intelligence and public policy officer. Krebs headed the Cybersecurity and Infrastructure Security Agency during Trump’s first term and was fired over Twitter when he said Trump had lost the election. According to Reuters, the largest cybersecurity companies refused to comment on the move.

John Fitzgerald contributed to this article.

By Kteba Dunlap, Esq.

Gaudêncio Advogados Featured in the “Who Represents Latin America’s Biggest Companies 2024” Survey by LACCA

The results of the renowned Who Represents Latin America’s Biggest Companies 2024 survey, conducted by LACCA (Latin American Corporate Counsel Association)—a sister publication of the prestigious Latin Lawyer—were recently released.

This annual survey identifies the law firms that serve as legal counsel to the 100 largest companies in Latin America, ranked by revenue. The research is based on data provided directly by law firms, which report the major companies they have advised over the past 12 months. All information is later verified and cross-checked by LACCA’s editorial team.

In the 2024 edition, Gaudêncio Advogados was recognized for advising two major players in the Latin American corporate landscape.

The firm’s inclusion in the list reinforces its strong reputation and consistent performance in the corporate legal market, providing strategic legal counsel to high-profile companies with national and international relevance.

More info: https://infogram.com/law-firms-advising-top-100-companies-1h984wvxqjrvz2p

(Syndigate) EU Europe Regulation The recommendation, made by the European Insurance and Occupational Pensions Authority (EIOPA) in a technical report to the European Commission on March 27. Last updated: March 28, 2025 06:21 EDT Author Ruholamin Haqshanas Author Ruholamin Haqshanas About Author

Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto…

Author Profile Share Copied Last updated: March 28, 2025 06:21 EDT Why Trust Cryptonews Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas – from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

The European Union’s insurance watchdog is proposing a stringent new rule that would require insurers to maintain capital reserves equal to the full value of their cryptocurrency holdings.

The recommendation, made by the European Insurance and Occupational Pensions Authority (EIOPA) in a technical report to the European Commission on March 27, aims to shield policyholders from the volatility and risks associated with digital assets.

EIOPA described the measure as a necessary safeguard, citing the high volatility of cryptocurrencies like Bitcoin and Ether.

“EIOPA considers a 100% haircut in the standard formula prudent and appropriate for these assets,” the agency stated.

EU’s Crypto Capital Rule Far Stricter Than Requirements for Stocks and Real Estate

The proposed requirement is considerably tougher than capital standards for traditional assets—stocks, for example, require just a 39–49% capital charge, while real estate assets are backed by only 25%.

The recommendation fills a regulatory void between the EU’s Capital Requirements Regulation (CRR) and the forthcoming Markets in Crypto-Assets Regulation (MiCA), as current insurance laws lack clear directives for crypto exposure.

EIOPA laid out four policy options for the Commission, ultimately endorsing the third: a full 100% stress level, indicating firms should prepare for a complete loss of value in crypto assets.

“An 80% stress to the value of crypto-asset exposures does not appear sufficiently prudent,” EIOPA explained.

By contrast, a 100% stress level assumes total loss and rules out the benefits of diversification.

Historical data supports this approach—Bitcoin and Ether have suffered price drops of 82% and 91%, respectively.

EIOPA argues that this proposal would not impose excessive burdens on insurers, noting that crypto exposure among European insurers is minimal—just €655 million or 0.0068% of total industry assets.

The regulator emphasized that the proposed rule would enhance policyholder protection without incurring material costs.

EIOPA Flags Rising Interest in Crypto Despite Limited Insurance Exposure

While crypto-related insurance activity is currently marginal, EIOPA acknowledged the growing interest in digital assets.

Luxembourg and Sweden lead the region in crypto exposure among insurers, accounting for 69% and 21%, respectively, based on Q4 2023 data. Ireland, Denmark, and Liechtenstein round out the top five.

Most of the crypto exposure, EIOPA noted, is held through investment funds such as exchange-traded funds (ETFs) and is linked to unit-linked insurance policies.

Still, the authority cautioned that broader adoption of crypto assets may, in the future, require a more nuanced regulatory framework.

A recent survey by Bitpanda revealed a widening gap between European banks and growing investor demand for crypto services.

While digital assets continue to gain traction across the continent, most traditional financial institutions remain slow to adapt.

The Bitpanda survey found that despite rising interest in cryptocurrencies like Bitcoin and Ethereum, only a small percentage of EU banks currently offer crypto-related services such as custody, trading, or staking.

Regulatory uncertainty and risk aversion remain key obstacles, even as the Markets in Crypto-Assets Regulation (MiCA) framework begins to offer more clarity.

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(JD Supra) Following President Trump’s March 6 Executive Order establishing a Strategic Bitcoin Reserve, released alongside a White House Briefing, the U.S. government has taken its most formal step yet toward integrating digital assets into national economic and security policy. The order outlines a broader strategy to manage and expand the federal government’s holdings of Bitcoin and other designated cryptocurrencies through the creation of a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile.

While many details remain forthcoming, existing government practices around crypto asset custody, combined with reporting on the administration’s plans, offer a glimpse into how the reserve may operate in practice.

Bitcoin: The Foundation of the Reserve

The executive order calls for the formation of a Strategic Bitcoin Reserve, leveraging the U.S. government’s existing crypto holdings—estimated to exceed 200,000 BTC based on seizures of crypto in connection with illicit activities. These assets are already under federal control and provide a ready base for the reserve.

The Department of Justice (DOJ) has historically overseen management of some of the U.S. government’s crypto assets under its Digital Asset Forfeiture Program. The U.S. government has also contracted with third-party institutional crypto custodians to provide secure custody, wallet management, and liquidation services for seized crypto assets. The U.S. Marshals Service, a unit of the DOJ, has also periodically offered crypto for sale, just as it does with artwork, vehicles and other assets forfeited to the government in various criminal, civil and administrative cases.

However, the White House Briefing points out shortcomings in the U.S. government’s current crypto asset management protocols, including that assets are scattered across multiple Federal agencies, leading to a non-cohesive approach where options to maximize value and security of crypto holdings have been left unexplored. Additional measures could include multi-signature wallet storage, layered access controls, segregated storage (as opposed to pooling crypto assets in one omnibus wallet), strategic portfolio management, and specialized regulatory oversight via the Presidential Working Group on Digital Asset Markets.

Beyond Bitcoin: The Digital Asset Stockpile

In addition to Bitcoin, the executive order also calls for the creation of a U.S. Digital Asset Stockpile, which will include four cryptocurrencies, reportedly selected for their market relevance, technical resilience, and utility in decentralized finance (DeFi) and cross-border settlement use cases. The rationale, as outlined in a White House briefing, is to ensure the United States maintains influence and optionality in emerging blockchain ecosystems while encouraging domestic innovation.

To date, no details have surfaced regarding a formal acquisition program for these assets or how the crypto asset portfolio will be managed.

Putting It Into Practice:The launch of the Strategic Bitcoin Reserve and Digital Asset Stockpile marks a watershed moment in U.S. crypto policy. This policy signals a clear shift toward legitimizing digital assets as sovereign financial instruments and could prompt other nations to consider similar reserves (for our previous discussions on recent developments in the ongoing shift in U.S. crypto policy, see here, here, here, and here). This development also suggests the U.S. intends to play an active role in shaping global crypto governance—not only through regulation, but also through participation and ownership.

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NEW YORK (Reuters) – The U.S. Supreme Court on Wednesday ruled that bankruptcy trustees may not claw back allegedly fraudulent federal tax payments made more than two years before a company’s bankruptcy filing.

In an 8-1 ruling, the court reversed a decision from the 10th U.S. Circuit Court of Appeals, which had allowed a bankruptcy trustee to try to claw back $145,000 that executives of bankrupt Utah transportation company All Resort Group allegedly misappropriated from the company to pay their personal tax debts.

The federal government’s sovereign immunity should have stopped the trustee from suing it to recoup the disputed tax payments, Justice Ketanji Brown Jackson wrote for the Supreme Court.

U.S. bankruptcy law allows courts to order the return of “fraudulent transfers,” and the clawback provisions are meant to prevent debtors from unfairly favoring some creditors over others when making payments from a limited pool of assets. The bankruptcy trustee sought to use those funds to pay other creditors, including a former employee who is owed $55,000 for an employment discrimination settlement.

U.S. bankruptcy law provides that the federal government’s sovereign immunity is waived for certain clawback claims, but only for payments that were made up to two years before a bankruptcy filing. Most U.S. states, including Utah, have passed state fraudulent transfer laws allowing for a longer lookback period. The U.S. bankruptcy code allows trustees to pursue clawbacks under either its direct authority or through state law.

The U.S. Solicitor General had argued that the 10th Circuit decision opened the door to clawbacks of older tax claims, which threatened “substantial consequences” for the government’s finances and gave bankruptcy trustees “even more incentive to seek to recoup federal tax payments.”

The All Resort Group trustee, David Miller, countered that the government sought to keep money it “should have never gotten in the first place,” at the expense of creditors like All Resort Groups’ former employees.

In Wednesday’s ruling, the Supreme Court said sovereign immunity is not waived when the clawbacks are attempted using state laws with longer statutes of limitations. Utah law should not be applied to a tax payment, because the government’s sovereign immunity would protect it from any non-bankruptcy attempt to recoup the tax payment, Jackson wrote.

Representatives for Miller and the U.S. government did not immediately respond to requests for comment.

U.S. appeals courts were split over how to apply state fraudulent transfer laws to federal tax payments.

The 10th Circuit had ruled in this case that sovereign immunity was waived even when clawback claims were pursued under state laws with longer statutes of limitations. The 4th and 9th Circuits have agreed that older tax payments are subject to clawbacks in bankruptcy, while the 7th Circuit has ruled they are not.

Justice Neil Gorsuch dissented, writing that the bankruptcy trustee should have been allowed to pursue a clawback against the federal government. The fact that the government would have a sovereign immunity defense outside of bankruptcy did not change the fact that Congress “has chosen to waive” that defense in the bankruptcy context, according to the dissent.

The case is: United States v. Miller, U.S. Supreme Court, No. 23-824.

For ARG trustee David Miller: Lisa Blatt of Williams & Connolly

(Reuters) – Breakups are rarely easy, but the acrimony over a busted blockbuster deal can rival finger-pointing by the bitterest of star-crossed lovers.

Consider the blame game unfolding now between Kroger and Albertsons in Delaware Chancery Court, where each grocery chain is attempting to fault the other for the failure of their $25 billion merger, which was blocked by judges in both federal and state courts in December.

To hear Albertsons tell it in its Chancery Court lawsuit seeking billions of dollars, Kroger had “a classic case of buyer’s remorse” after negative reaction to the merger by investors, workers and politicians, as well as falling post-pandemic profits. As a result, Kroger allegedly failed to take “any and all actions” possible to win antitrust approval for the deal, as required by the merger agreement.

In a countersuit made public on Tuesday, Kroger says Albertsons “secretly coordinated” with C&S Wholesale Grocers, which was set to buy hundreds of grocery stores that the parties planned to divest, in a “surreptitious scheme” to pursue their own regulatory strategy.

Kroger is seeking unspecified damages from Albertsons for willfully breaching the merger agreement.

Also jumping in the fray, C&S on March 14 sued Kroger in Delaware Superior Court seeking payment of a $125 million termination fee it says it’s entitled to under its agreement with Kroger.

This isn’t the first time companies in a merger gone wrong have sued each other in Delaware, though the cases tend to be highly fact-specific. To misquote Tolstoy, every failed merger fails in its own way.

Still, a 2020 decision by Vice Chancellor Travis Laster holding that Cigna breached its obligation to try to close a $54 billion merger with Anthem – but that the merger would probably have been enjoined anyway, so Anthem wasn’t entitled to recover damages – will likely come into play in allocating the burden of proof for the thwarted grocery union.

A Kroger spokesperson declined comment.

Albertsons in a statement said it was “steadfastly committed to the success of the combination,” but that Kroger “did not hold up its end of the bargain.”

A C&S spokesperson said via email that the New Hampshire-based company “worked tirelessly in support of the merger and divestiture, including communicating with both Kroger and Albertsons executives.”

Announced in 2022, the proposed merger would have been the largest-ever supermarket combination.

Kroger – operating stores under regional names including Fry’s, Harris Teeter and King Soopers – and Albertsons – whose regional banners include Jewel-Osco, Safeway and Vons – together have about 5,000 supermarkets across 48 states.

Going into the deal, Kroger anticipated it would have to sell off stores in locations where the two chains competed head-to-head to appease the Federal Trade Commission and state regulators. Per the merger agreement, Kroger agreed to divest up to 650 properties and lined up C&S as the buyer.

Like many antitrust fights, market definition was key.

Kroger argued its grocery competitors nowadays go beyond traditional supermarkets to include retail behemoths like Walmart, Costco and Amazon. If Kroger could convince regulators to adopt such a broad view of the competitive landscape, perhaps divesting a few hundred stores might assuage their concerns that the merger would lead to higher prices for consumers.

At its first meeting with the FTC, Kroger proposed shedding just 238 stores, Albertsons said. Kroger subsequently offered to divest 413 stores to C&S, later upping the total to 541, then 579 outlets.

Albertsons argues this was the wrong approach, calling Kroger’s position “indefensible.” According to Albertsons, Kroger “squandered its credibility with regulators” by refusing to propose a viable divestment package, its lawyers from Williams & Connolly; Selendy Gay; Dechert; and Richards, Layton & Finger wrote in the Delaware complaint.

Albertsons also says Kroger shut it out of the “disorganized [and] protracted” process of selecting C&S as the purchaser, and that picking a wholesaler with a limited track record of running retail outlets “introduced new obstacles” for regulatory approval.

The FTC along with attorneys general from eight states and the District of Columbia sued to block the deal in 2024, while Colorado and Washington filed suits on their own.

Albertsons says it’s owed a $600 million contractual break-up fee since the merger failed to close by the outside date set in the agreement, plus additional damages.

Under the terms of the merger agreement, Kroger was in charge of antitrust regulatory strategy, while Albertsons was obliged to cooperate and support the effort. Kroger faults Albertsons for allegedly engaging in “secret communications” with C&S, urging it to tell regulators it needed more stores from Kroger to compete effectively post-merger, Kroger counsel from Weil Gotshal & Manges and Ross Aronstam & Moritz wrote.

Offering to divest more assets is of course one way to mitigate antitrust concerns, but here, Kroger said Albertsons’ rogue strategy backfired, making regulators believe C&S was “a weak buyer that would not be an effective competitor regardless of the number of stores it received.”

Kroger also alleges Albertsons manufactured a “faux litigation record” of “lawyer-crafted letters” so it would be ready to sue its would-be partner for billions of dollars if the merger failed to close. To bolster the allegations, Kroger notes that shortly after court decisions enjoining the merger were issued, Albertsons moved to terminate the deal and sued Kroger in Delaware for damages.

“No doubt capable counsel represents Albertsons, but even they could not draft a 140-page complaint in a few hours,” Kroger said.

Was having a complaint ready to go nefarious? Or just advance planning?

The Delaware court will decide this and other questions in weighing whether the union was ever meant to be, with a possible trial late next year or early 2027.