Strategy, previously known as MicroStrategy, faces a class-action lawsuit alleging it made misleading statements regarding its Bitcoin investment strategy.
The lawsuit filed on May 19 claims that Strategy failed to adequately disclose risks associated with its Bitcoin holdings, pointing to a staggering $5.9 billion unrealized loss reported in the first quarter of the year. This financial setback contributed to an 8.67% decline in MSTR shares during trading on April 7.
Claims in the suit indicate that Strategy officials misrepresented both the “anticipated profitability” of their Bitcoin investments and the inherent “risks associated with Bitcoin’s volatility.”
A central concern highlighted in the lawsuit is the company’s persistent reference to key performance indicators such as BTC Yield, which measures the ratio of Bitcoin holdings to common shares outstanding.
These performance metrics are alleged to have minimized the risks associated with employing a fair-value accounting approach for Bitcoin reserves.
Defendants named in the suit include Strategy chairman Michael Saylor, president and CEO Phong Le, as well as executive vice president and chief financial officer Andrew Kang.
Continued Investments Amid Legal Challenges
As of May 18, Strategy maintains a significant Bitcoin portfolio of 576,230 BTC, acquired at an estimated cost of $40.2 billion, representing an average purchase price of $69,726 per coin.
Never short a man who buys orange ink by the barrel. pic.twitter.com/4h2sEbIraT
— Michael Saylor (@saylor) May 18, 2025
At current market valuations, the company’s Bitcoin holdings exceed $59.2 billion, reflecting an unrealized profit of $19.2 billion or approximately 47% on its investments.
Following the lawsuit, Strategy has continued its Bitcoin acquisitions, with a recent purchase of 7,390 BTC valued at $764.9 million.
Research and brokerage firm Bernstein has projected that corporations could potentially invest a total of $330 billion in Bitcoin by 2029, with public companies likely emulating MicroStrategy’s approach to Bitcoin treasury management.
Data from BitBO underscores the increasing institutional interest in Bitcoin, noting that public companies now hold over 739,501 BTC, valued at more than $68 billion.
Concerns Over Regulatory Precedents
Market analysts express concerns that the lawsuit against Strategy could create a precedent for more extensive regulatory enforcement, jeopardizing corporate Bitcoin treasuries.
Pseudonymous analyst Vagada remarked that the lawsuit might “test the legal frontier” regarding corporate Bitcoin adoption.
If true, this could test more than just Saylor’s strategy—it tests the legal frontier of corporate Bitcoin adoption. But conviction under fire? That’s when legends or liabilities are made.
— vagada (@vagam00n) May 19, 2025
Conversely, some analysts argue that the lawsuit lacks substantial grounds. Developer 0xngmi from DeFiLlama critiqued the claims in a May 19 post, stating that the lawsuit seems to be a reaction to perceived risks rather than a legitimate allegation.
The lawsuit seems to be people complaining that MicroStrategy understated how much money it could lose if BTC went down
but if you’re buying a company that is self-labelled as “leverage on Bitcoin,” what do you expect? It’s pretty clear what will happen if BTC goes down. https://t.co/w0Dis8ZUM9 pic.twitter.com/I6Uw6zMcqJ
— 0xngmi (@0xngmi) May 19, 2025
He dismissed claims about understated risks, asserting, “You’re buying a company that is self-labelled as ‘leverage on Bitcoin,’ what do you expect?”
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