Michael Saylor and Strategy Hit with Class Action Lawsuit Over Alleged False Bitcoin Statements

– Class action lawsuit filed against Strategy and Michael Saylor.
– Allegations of false profitability and risk statements.
– Significant unrealized loss disclosed to the SEC.
– Strategy continues to invest heavily in Bitcoin.

Michael Saylor, the founder of what was once MicroStrategy and now rebranded as Strategy, finds himself at the center of a legal storm. Pomerantz LLP has launched a class action lawsuit against him and his company, alleging that Strategy made false and misleading statements regarding its Bitcoin investment strategy and overall profitability.

The lawsuit accuses Strategy of overhyping the anticipated profitability of its Bitcoin investments while downplaying the risks associated with the cryptocurrency’s notorious volatility. For those new to crypto, Bitcoin’s volatility means its price can swing wildly, making it a risky investment. The legal challenge comes on the heels of Strategy’s SEC disclosure of a whopping unrealized loss of $5.91 billion. An unrealized loss means the value of their Bitcoin has dropped on paper, but they haven’t sold it yet. This figure emerged after the company adopted new accounting methods that reflect the current market value of their digital assets, specifically under the new standards known as ASU 2023-08.

In a twist that might leave even the most seasoned crypto enthusiasts scratching their heads, Strategy warned investors that it might not see a return to profitability in the near future. Yet, in a move that screams “hold on to your hats—or should we say, your crypto wallets?” the company announced the acquisition of over 568,840 BTC, now valued at more than $59.8 billion, on the very day the lawsuit was filed. Talk about doubling down on their bet!

The class action covers those who acquired Strategy securities between April 30, 2024, and April 4, 2025, a period during which the company’s statements allegedly misled investors. As Strategy continues to bet big on Bitcoin, the lawsuit raises serious questions about the transparency and accuracy of its financial reporting.

The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding Strategy’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the anticipated profitability of the Company’s bitcoin-focused investment strategy and treasury operations was overstated; (ii) the various risks associated with bitcoin’s volatility and the magnitude of losses Strategy could recognize on the value of its digital assets following its adoption of ASU 2023-08 were understated; and (iii) as a result, Defendants’ public statements were materially false and misleading at all relevant times.

This legal battle arrives at a time when corporate investment in Bitcoin is under the microscope. Michael Saylor has long been a champion of the cryptocurrency, and Strategy’s massive Bitcoin holdings have often been touted as evidence of its potential as a store of value. However, the adoption of new accounting standards and the subsequent revelation of significant unrealized losses have cast a shadow over the company’s financial disclosures.

While some financial analysts argue that Strategy’s long-term hold strategy could still pay off if Bitcoin’s value rises, the lawsuit adds another layer of complexity to the narrative surrounding Bitcoin’s volatility and the risks of corporate investment in digital assets. Legal experts are watching closely, as this case could set a precedent for how companies report on their cryptocurrency investments in the future.

On the flip side, some might argue that Strategy’s unwavering faith in Bitcoin, despite the legal and financial turbulence, could be seen as a testament to their belief in the cryptocurrency’s future. After all, in a world where nothing is certain, betting on Bitcoin could be seen as a calculated risk—or a leap of faith.

As the crypto world continues to evolve, this lawsuit against Strategy and Michael Saylor serves as a stark reminder of the challenges and scrutiny that come with betting big on Bitcoin. Whether this gamble will pay off remains to be seen, but one thing is certain: the crypto community will be watching every twist and turn of this legal saga with bated breath.

Key Takeaways and Questions

– What is the basis of the class action lawsuit against Strategy and Michael Saylor?

The lawsuit alleges that Strategy made materially false and misleading statements about its profitability and understated the risks associated with its Bitcoin investment strategy.

– How much unrealized loss did Strategy disclose to the SEC?

Strategy disclosed an unrealized loss of $5.91 billion to the SEC after adopting updated accounting methods.

– What did Strategy warn investors about following the SEC filing?

Strategy warned investors that it might not regain profitability in future periods.

– How many Bitcoins does Strategy hold, and what is their current value?

Strategy holds 568,840 BTC, valued at over $59.8 billion.

– Did Strategy continue to invest in Bitcoin after the lawsuit was filed?

Yes, Strategy announced another large purchase of Bitcoin on the same day the lawsuit was launched.

– What could be the broader implications of this lawsuit for the cryptocurrency industry?

This case could set a precedent for how companies report on their cryptocurrency investments, potentially affecting transparency and investor trust in the sector.

– Is Strategy’s long-term hold strategy still viable despite the lawsuit?

Some financial analysts believe that if Bitcoin’s value rises, Strategy’s strategy could still pay off, but the lawsuit adds complexity and risk to this approach.