Strategy May Buy More Bitcoin Amid $5.9 Billion Loss Lawsuit

Michael Saylor, the executive chairman of Strategy, has indicated that the company may purchase more Bitcoin in the near future. This announcement comes amidst a lawsuit filed by an investor against Strategy and its top executives, citing a $5.9 billion loss on its Bitcoin holdings during the first quarter of the year.

Saylor shared a chart on X, formerly known as Twitter, depicting Strategy’s past Bitcoin purchases. The chart was accompanied by the caption: “Nothing Stops This Orange.” Previous similar posts by Saylor have preceded Strategy’s Bitcoin acquisitions. The company currently holds the largest Bitcoin reserves among public companies, with 592,100 BTC valued at approximately $59.7 billion, given the current Bitcoin price of just under $101,000.

The lawsuit, filed by investor Abhey Parmar in a Virginia federal court, alleges that Saylor, Strategy CEO Phong Le, financial chief Andrew Kang, and four board directors made materially false and misleading statements regarding an accounting practice change. The complaint asserts that in January, Strategy adopted a Financial Accounting Standards Board rule that allows corporate holders of crypto to use the estimated market value of their crypto in their balance sheets. This change reportedly led to a $5.9 billion unrealized loss on Strategy’s Bitcoin holdings for the first quarter, resulting in a nearly 9% drop in the company’s stock price.

The lawsuit further claims that Strategy’s executives failed to accurately disclose the full extent of the potential impact of the accounting change and did not disclose that the risks associated with Bitcoin’s volatility were greater than represented. The complaint also alleges that the executives engaged in lucrative insider sales of the company’s stock while it was artificially inflated, making nearly $31.5 million from these trades. Additionally, the lawsuit accuses the executives of abusing their control, gross mismanagement, and wasting corporate assets.

In mid-May, Strategy faced another proposed class-action lawsuit, also related to the adoption of the FASB crypto accounting rule. This suit, filed by Anas Hamza, alleges that the company failed to disclose the particular nature or scope of the expected impact while downplaying the attendant risks. Strategy has stated that it will vigorously defend against these claims.

Despite the legal challenges, Strategy’s shares have seen a significant increase this year, rising nearly 28% from a low of just under $238 in early April. The company’s Bitcoin-driven investment strategy and treasury options have been a subject of debate, with some analysts questioning their profitability. However, Saylor’s recent post suggests that Strategy remains committed to its Bitcoin holdings and may continue to invest in the cryptocurrency.