James Richardson
A major class action lawsuit has been filed against Strategy (formerly known as MicroStrategy) by the New York law firm Pomerantz LLP, accusing the company of misleading investors about the true risks and financial impact of its aggressive Bitcoin investment strategy.
The legal action was initiated in the U.S. District Court for the Eastern District of Virginia and represents shareholders who invested in Strategy between April 30, 2024, and April 4, 2025. Investors have until July 15 to join the case.
Lawsuit Claims Strategy Hid Key Risks from Investors
Pomerantz alleges that Strategy not only overstated the profitability of its Bitcoin-focused treasury model but also understated the risks associated with crypto market volatility. This created a false sense of financial security for investors, the firm claims.
The lawsuit centers around Strategyโs recent adoption of the ASU 2023-08 accounting standard, which mandates fair value accounting for digital assets. This change replaced the companyโs previous โcost-less-impairmentโ method โ which recorded losses when prices dropped but didn’t reflect gains unless assets were sold.
“Strategy failed to be transparent about how this shift would affect its financials,” the lawsuit argues.
$5.9 Billion Unrealized Losses Trigger Stock Drop
The filing highlights that under the new accounting rules, Strategy reported $5.9 billion in unrealized losses in Q1 2025 โ a figure that shocked investors and triggered an 8% drop in stock price at the time.
Despite this, the company allegedly continued to promote a positive outlook, reporting strong BTC Yield and BTC Gains without properly acknowledging the potential downside of fair-value evaluations.
Strategyโs Bitcoin Strategy Comes Under Scrutiny
Originally rebranded from MicroStrategy, the firm began aggressively accumulating Bitcoin in 2020 and now holds 597,325 BTC, making it the largest corporate holder of Bitcoin worldwide.
While Strategyโs stock has seen a dramatic 3,328% rise over the past five years, legal experts say its communication around the financial risks of crypto exposure may not have matched the reality.
The companyโs recent performance includes a 7.76% gain on Wednesday, closing at $402.28, according to Yahoo Finance. However, this lawsuit could cast a shadow over its long-term investor relations and corporate disclosures.
Whatโs Next for Strategy and Its Investors?
This lawsuit could have far-reaching implications not only for Strategy but also for other public companies adopting Bitcoin treasury strategies. Firms like Metaplanet, which have followed a similar path, may now face increased scrutiny from regulators and shareholders alike.
Investors are encouraged to stay informed, especially as the deadline to join the class action approaches.
