The law firm Pomerantz LLP has filed a class action lawsuit in the U.S. District Court for the Eastern District of Virginia against Strategy (formerly known as MicroStrategy) and its management. The plaintiffs allege that the company misled investors by exaggerating the profitability of its bitcoin strategy and concealing the risks associated with cryptocurrency volatility.
This is reported by Business • Media
Allegations of false financial statements
The lawsuit states that Strategy published false information regarding its financial results, particularly concerning new key performance indicators — BTC Yield, BTC Gain, and BTC $ Gain. This data was used to demonstrate an allegedly successful investment strategy in bitcoin. According to Pomerantz LLP, the company underestimated the risks associated with changes in accounting standards and the volatility of the crypto asset.
“Strategy allegedly concealed the risks associated with the volatility of the leading cryptocurrency and changes in accounting standards.”
New accounting standards and financial losses
As of January 1, 2025, Strategy switched to accounting for crypto assets under the FASB ASU 2023-08 standard, which requires the valuation of digital assets at fair value. Prior to the implementation of this standard, the company only recorded losses from asset impairment, while increases in the value of bitcoin were not reflected until the time of sale. Following the first quarter of 2025, Strategy reported unrealized losses of $5.91 billion. This data was confirmed in a financial report released on May 1, 2025.
The complaint notes that the company’s management:
- overstated the profitability forecasts of its bitcoin strategy;
- underestimated the risks associated with cryptocurrency volatility as well as potential losses due to new accounting standards;
- made statements that were significantly inaccurate and misleading throughout all stages of communication with the market.
It is worth noting that at the end of June 2025, Strategy acquired an additional 4,980 bitcoins for a total of $532 million.