Strategy Faces Five Securities Fraud Lawsuits Over Bitcoin Holdings

Strategy, a company known for its substantial Bitcoin holdings, is currently embroiled in at least five separate securities fraud lawsuits. These legal actions allege that the company made materially false and misleading statements about the profitability and risks associated with its Bitcoin acquisitions over an 11-month period, from April 30, 2024, to April 4, 2025. The first lawsuit was filed by Pomerantz LLP on May 16, with subsequent identical suits from Gross Law Firm, Bronstein, Gewirtz & Grossman, Kessler Topaz Meltzer & Check, and Levi & Korsinsky.

The proliferation of these lawsuits is a common tactic in securities class actions, where law firms file multiple complaints to position themselves as lead counsel. This role is highly sought after because it controls the litigation strategy and can yield substantial fees. According to University of Colorado law professor Ann Lipton, the lead plaintiff “controls the litigation and selects counsel,” making the position highly coveted. The Private Securities Litigation Reform Act of 1995 prioritizes plaintiffs with the largest losses and institutional investors, who are deemed better equipped to oversee complex litigation.

While Strategy co-founder Michael Saylor remains the largest individual shareholder with nearly 20 million shares valued at approximately $7.8 billion, several institutional investors hold significant stakes. Vanguard Group owns 8.55%, BlackRock and Capital International Investors each hold 5.8%, Susquehanna Securities has 4.8%, and Jane Street Group holds 4.7%. It remains unclear if these major investors have joined any of the competing class actions as lead plaintiffs.

Strategy’s Bitcoin holdings, totaling 592,345 BTC, recently surpassed a valuation of $63 billion. However, the company disclosed nearly $6 billion in unrealized losses on these digital assets in its Q1 earnings report, warning investors of potential ongoing profitability challenges. The average purchase price for BTC in Q1 was $95,000 per coin, but the price dropped to around $82,000 by the earnings report date before rebounding to approximately $107,000. These fluctuations have intensified scrutiny and fueled the wave of litigation.

Strategy has acknowledged the lawsuits in multiple SEC 8-K filings, emphasizing its intent to vigorously defend against the claims. The company has refrained from predicting the outcome or estimating potential losses related to the litigation. As the July 15 deadline approaches for appointing a lead plaintiff, the consolidation of these class actions under a single representative is anticipated, which will streamline the legal process and determine the trajectory of this high-profile case.

The surge of securities fraud lawsuits against Strategy underscores the heightened legal risks companies face when managing large cryptocurrency treasuries. While the number of suits is not unusual in such cases, the involvement of major institutional investors and the substantial valuation of Strategy’s Bitcoin holdings make this litigation particularly significant. Investors and market observers should monitor developments closely as the legal process unfolds and a lead plaintiff is appointed to steer the consolidated class action.