Strategy Faces Lawsuit Over Bitcoin Strategy Losses

MicroStrategy, now rebranded as Strategy, is facing a class action lawsuit over its Bitcoin strategy. The lawsuit, filed by the New York-based law firm Pomerantz LLP in the Eastern District Court of Virginia, alleges that Strategy misled investors about its Bitcoin strategy and downplayed the associated risks. The case covers investors who purchased Strategy shares between April 2024 and April 2025.

Pomerantz LLP contends that Strategy violated federal securities laws by making false and misleading statements about the profitability of its Bitcoin investment strategy. The firm also alleges that Strategy failed to adequately disclose the impact of new accounting standards (ASU 2023-08) on its financial statements, thereby misleading investors about the risks involved. According to the lawsuit, Strategy incurred $5.9 billion in unrealized losses from digital assets due to the adoption of ASU 2023-08 in the first quarter of 2025. This financial setback reportedly caused the company's stock price to decline by more than 8%, resulting in significant losses for MSTR investors.

Pomerantz LLP represents investors who purchased Strategy shares during the specified period and has extended an invitation for other affected investors to join the class action until July 15. Strategy's Bitcoin accumulation strategy, initiated in 2020, has positioned the company as the largest holder of Bitcoin among publicly traded companies, with a current holding of 597,325 BTC. This lawsuit adds to the growing list of legal challenges faced by Strategy, highlighting the risks and controversies associated with its aggressive Bitcoin investment strategy.

The outcome of this lawsuit could have significant implications for the company and the broader cryptocurrency market. It raises questions about the transparency and accountability of companies engaging in high-risk investment strategies. The allegations against Strategy underscore the importance of accurate disclosure and risk management in the cryptocurrency sector, where volatility and regulatory uncertainty are prevalent. Investors and industry observers will be closely watching the developments in this case, as it could set a precedent for future legal actions against companies with substantial cryptocurrency holdings.