A class action lawsuit has been filed against Strategy (formerly MicroStrategy), alleging that the company issued false and misleading statements regarding its Bitcoin investment strategy and the impact of recent accounting standard changes.
NY Law Firm Alleges Misrepresentation of Bitcoin Profitability
Pomerantz LLP, a prominent New York-based law firm, filed the suit in the U.S. District Court for the Eastern District of Virginia on behalf of investors who purchased Strategy stock between April 30, 2024, and April 4, 2025.
The complaint claims Strategy and its executives overstated the financial performance of their Bitcoin treasury operations and downplayed the volatility and financial risks tied to holding large crypto reserves. It argues that the company’s public statements during this period were “materially false and misleading.”
Key Issue: Impact of New Accounting Rules
The lawsuit centers around the adoption of FASB’s ASU 2023-08, a new accounting rule requiring companies to use fair value accounting for digital assets. Previously, Strategy used the cost-less-impairment model, which only acknowledged losses when prices fell, but ignored unrealized gains.
Strategy allegedly failed to clearly communicate the financial impact of switching to the new standards, despite a reported $5.9 billion unrealized loss in Q1 2025 under the new accounting approach.
The lawsuit asserts that Strategy emphasized positive metrics like BTC Yield and BTC $ Gain while omitting the risks and potential losses related to the new valuation method.
Stock Reaction and Investor Impact
Following disclosure of the unrealized losses, Strategy’s stock dropped over 8%, triggering concerns from shareholders. Despite that dip, the stock closed up 7.76% on July 2, ending at $402.28, as broader crypto sentiment remains bullish.
Notably, Strategy holds the largest Bitcoin treasury of any public company, with 597,325 BTC on its balance sheet as of mid-2025. The firm adopted this aggressive Bitcoin strategy in 2020 under Executive Chairman Michael Saylor, resulting in a staggering 3,328% stock increase over five years.
Class Action Deadline Approaching
Investors seeking to join the class action must file by July 15, 2025. The outcome of this lawsuit could have wider implications for corporate crypto disclosures, especially for firms using Bitcoin as a treasury reserve.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.