Strategy Faces $5.9 Billion Loss Lawsuit Over Bitcoin Strategy

A class-action lawsuit has been filed against Strategy, formerly known as MicroStrategy, and its leadership, including Executive Chairman Michael Saylor. The lawsuit alleges that the company misled investors about the profitability and risks associated with its Bitcoin investment strategy. The plaintiff, Anas Hamza, claims that the company's exaggerated claims about Bitcoin's profitability resulted in a $5.9 billion loss, which was not recognized until the first quarter of 2025. This loss caused a significant drop in the company's stock price, harming investors.

Strategy, under Saylor's direction, began purchasing Bitcoin in 2020 and now holds over 576,000 BTC, valued at $60.6 billion. The company's aggressive approach involves raising funds through loans and stock markets to acquire more Bitcoin. The lawsuit names Saylor, Director Le, and CFO Andrew as defendants, alleging that their statements led shareholders to believe that the Bitcoin treasury strategy was stable and highly profitable. Hamza represents investors who lost money due to these alleged misrepresentations.

The lawsuit also highlights Strategy's recent acquisition of 7,390 BTC for $764.9 million, reported on May 19, 2025. The complaint argues that the company downplayed the risks and volatility of its Bitcoin holdings, despite claiming a 16.3% return on Bitcoin so far this year. Saylor has publicly supported Bitcoin, predicting that it could be worth $13 million by 2045 and advocating for it as a superior method of wealth preservation. This led Strategy to transition into a Bitcoin treasury company, resulting in a more than 3,000% increase in its stock price since 2020.

Critics argue that Strategy's heavy reliance on Bitcoin exposes shareholders to significant risks. The lawsuit contends that the company's failure to disclose these risks led to substantial financial losses when Bitcoin's price fluctuated, impacting the company's financial stability. The case, filed in the U.S. District Court for the Eastern District of Virginia, could set a precedent for companies using Bitcoin as a treasury asset and may lead to stricter regulations for firms handling large amounts of cryptocurrencies.

Economist Peter Schiff has criticized Strategy's Bitcoin acquisitions, warning that they could result in unrecognized losses if the market declines. Schiff suggests that a significant drop in Bitcoin prices could put the company in financial jeopardy due to its average purchase cost. Following the lawsuit, Strategy announced plans to buy $1.34 billion worth of Bitcoin between May 5 and May 11, 2025, adding 13,390 BTC to its portfolio.

This legal action could influence other companies considering Bitcoin as a treasury asset. For instance, Metaplanet in Japan has adopted Strategy's concept, collaborating with Sora Ventures to develop a Bitcoin treasury. The outcome of this case may impact the future of similar initiatives. The lawsuit underscores the potential risks and regulatory challenges associated with companies heavily investing in cryptocurrencies, highlighting the need for transparency and accurate disclosure of financial risks.