A class-action lawsuit has been filed against MicroStrategy (now Strategy) and its founder, Michael Saylor. The suit alleges that the company misled investors about its financial health and profitability.
The Allegations
The lawsuit, filed by Pomerantz LLP, claims that Strategy made false and misleading statements about its Bitcoin-focused investment strategy between April 30, 2024, and April 4, 2025. Specifically, the complaint alleges:
- The company overstated the expected profitability of its Bitcoin investments.
- It understated the risks associated with Bitcoin’s volatility and the potential for significant losses.
- These misrepresentations made the company’s public statements false and misleading.
The SEC Filing and Losses
The lawsuit follows a recent SEC filing where Strategy revealed a staggering $5.91 billion unrealized loss. This loss resulted from adopting new accounting methods and highlights the significant risk associated with their massive Bitcoin holdings. The company also warned investors that future profitability isn’t guaranteed. Despite this, Strategy recently announced another large Bitcoin purchase.
The Bottom Line
This lawsuit raises serious questions about the transparency and accuracy of Strategy’s financial reporting, particularly concerning its substantial Bitcoin investments. The outcome will have significant implications for the company and the broader cryptocurrency market. It’s important to remember that this is a developing story, and all parties involved are presumed innocent until proven guilty.
