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crypto.news 2025-07-03 13:10:46

Michael Saylor’s Strategy hit with class-action lawsuit over $5.9 billion BTC loss

Strategy’s high-stakes bet on Bitcoin has earned praise across the industry, but that same bold mission may now be brewing legal troubles for the firm. A class-action lawsuit filed in the U.S. District Court for the Eastern District of Virginia is targeting the company and some of its top executives, including founder and executive chairman Michael Saylor. The suit represents investors who bought Strategy stock between April 30, 2024, and April 4, 2025, with plaintiffs alleging that the company misled shareholders about the risks and financial impact of its Bitcoin strategy. Since rebranding as a “Bitcoin Treasury Company,” Strategy has continued to strengthen its bet on the crypto asset, steadily accumulating BTC ( BTC ) using corporate funds raised through debt, equity, and operating income as its main reserve asset. The firm also introduced bitcoin-focused financial metrics, such as BTC Yield and BTC Gain, to track the performance of its strategy. But trouble began after it adopted a new accounting rule. New Accounting Rules Expose Hidden Risks On January 1, 2025, Strategy adopted ASU 2023-08, a new accounting rule requiring companies to report the fair value of crypto assets. Under the new guideline, both unrealized gains and losses must now be included in its quarterly earnings. Before this change, Strategy used a more limited method where it only recorded losses if bitcoin’s price fell below the purchase price, and gains were not recognized unless the assets were sold. This allowed the company to avoid showing negative swings in BTC’s market price in its income statements, unless triggered by a sale or impairment. While Strategy told investors the new rule could impact results, the lawsuit alleges the company downplayed the scale of the risk, continuing to release bullish performance indicators like BTC Yield and BTC Gain without showing the full downside. You might also like: Michael Saylor’s Strategy strengthens Bitcoin bet with 10,100 BTC purchase The impact came to light on April 7, 2025, when Strategy filed a report with the SEC revealing a $5.91 billion unrealized loss on its bitcoin holdings for the first quarter. The loss was tied to both the price drop in Bitcoin and the shift to fair value accounting and triggered an 8% drop in Strategy’s stock. Strategy confirmed the loss in its Q1 earnings report weeks later, stating that the company’s BTC holdings had to be marked down due to market volatility under the new accounting method. According to the complaint, the firm overstated the upside of its BTC holdings and failed to clearly warn investors about the risks, especially under the new accounting rules. It accuses the company of making false or misleading statements in violation of U.S. securities laws. The lawsuit now seeks to hold Strategy accountable and recover damages for investors who bought Strategy’s stock during the period. Despite the legal troubles, MicroStrategy remains the largest corporate holder of Bitcoin, with nearly 600,000 BTC still on its balance sheet, worth approximately $65 billion at current prices. Read more: 91% chance MSTR enters S&P 500 — and Bitcoin becomes an index asset by proxy

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