MicroStrategy Faces Legal Challenges Over Bitcoin strategy
MicroStrategy’s aggressive bitcoin investment strategy has earned industry praise but now faces legal scrutiny. A class-action lawsuit filed in the U.S. District Court for the Eastern District of Virginia targets the company and its top executives,including founder Michael Saylor.
The lawsuit represents investors who bought MicroStrategy stock between April 30, 2024, and April 4, 2025. Plaintiffs claim the company misled shareholders about the risks and financial impact of its Bitcoin strategy.As rebranding as a “Bitcoin Treasury Company,” MicroStrategy has steadily accumulated BTC using corporate funds.
The firm introduced metrics like BTC Yield and BTC Gain to track its strategy’s performance. However,trouble arose after adopting a new accounting rule,ASU 2023-08,on January 1,2025. This rule requires companies to report the fair value of crypto assets, including unrealized gains and losses in quarterly earnings.
Previously, MicroStrategy only recorded losses if Bitcoin’s price fell below the purchase price. The new rule exposed hidden risks, leading to a $5.91 billion unrealized loss on its Bitcoin holdings in the first quarter of 2025. This loss, tied to bitcoin’s price drop and the new accounting method, caused an 8% drop in MicroStrategy’s stock.
The lawsuit alleges MicroStrategy downplayed the risks and made false or misleading statements, violating U.S. securities laws. Despite legal troubles, MicroStrategy remains the largest corporate bitcoin holder, with nearly 600,000 BTC worth about $65 billion.
