Strategy Faces $5.9 Billion Loss, 8% Stock Drop in Bitcoin Lawsuit

Michael Saylor’s Strategy, the largest corporate holder of Bitcoin, is facing significant legal challenges as a major class action lawsuit has been filed against the company. The lawsuit, initiated by New York-based law firm Pomerantz LLP, alleges that Strategy and its CEO, Michael Saylor, misled investors regarding their Bitcoin strategy.

The lawsuit, filed in Virginia’s Eastern District Court, claims that between April 30, 2024, and April 4, 2025, Strategy and Saylor concealed crucial information from investors. According to Pomerantz, the firm only presented the positive aspects of its Bitcoin holdings, such as metrics like BTC Yield and BTC Gain, while allegedly downplaying or omitting significant risks. These risks include extreme price volatility and potential losses tied to new accounting requirements.

A central issue in the case is Strategy’s adoption of the new crypto accounting standard, ASU 2023-08. This standard requires companies to disclose the real-time fair value of digital assets like Bitcoin. Previously, Strategy only reported losses when Bitcoin’s price fell and gains only when coins were sold. The implementation of the new standard revealed an unrealized $5.9 billion loss in early 2025, which immediately shocked the market and triggered an 8% drop in Strategy’s stock price.

Strategy has been a prominent player in Bitcoin investment since 2020, currently holding over 597,000 Bitcoins, valued at approximately $65.85 billion. This makes Strategy the largest corporate holder of Bitcoin. Despite a remarkable 204% stock surge in the past year and a recent 7.7% jump to $402.28, this legal battle has put the company under intense scrutiny.

With a deadline of July 15 for investors to join the class action, the lawsuit raises critical questions about the sustainability of Strategy’s Bitcoin strategy. The crypto community and rival firms, such as Metaplanet, which have adopted similar Bitcoin strategies, are closely monitoring the case. The outcome of this lawsuit could have significant implications for the future of corporate Bitcoin investments and the transparency of financial reporting in the crypto industry.