New York law firm Pomerantz LLP has filed a class action lawsuit against Strategy, the Bitcoin-focused holding company led by Michael Saylor, accusing it of violating federal securities laws by misrepresenting the risks and returns of its cryptocurrency strategy.
Filed in the U.S. District Court for the Eastern District of Virginia, the complaint covers investors who purchased Strategy shares between April 30, 2024, and April 4, 2025. According to Pomerantz, the company issued statements that overstated the profitability of its aggressive Bitcoin accumulation while minimizing the asset’s inherent volatility.
“These disclosures were materially false and misleading,” the law firm said, urging other shareholders to join the suit by July 15.
Accounting Change Sparks Claims of Hidden Losses
The legal action also centers on Strategy’s adoption of the Financial Accounting Standards Board’s ASU 2023-08 rules, which require companies to mark crypto holdings to fair value every quarter—recognizing both gains and losses in real time.
Pomerantz alleges that Strategy did not clearly communicate how this accounting shift would affect its reported earnings and investor outlook.
“Defendants consistently provided rosy assessments of Strategy’s performance as a Bitcoin treasury company,” the complaint claims, citing repeated disclosures of projected BTC gains while failing to highlight the potential for large unrealized losses.
The lawsuit specifically points to the first quarter of 2025, when Strategy reported a $5.9 billion unrealized loss from digital assets under the new standards—an announcement that triggered an 8% decline in the stock price.
The Largest Corporate Bitcoin Holder Defends Its Strategy
Strategy, formerly MicroStrategy, pioneered the corporate Bitcoin treasury approach in 2020 and has since amassed 597,325 BTC, making it the largest Bitcoin holder among publicly traded companies.
The firm’s bet on Bitcoin has paid off in the long term, with its shares soaring more than 3,300% over the past five years. This remarkable run has inspired other firms, such as Metaplanet in Japan, to adopt similar strategies.
Despite recent volatility and legal scrutiny, investors appeared unfazed midweek: Strategy shares (MSTR) closed Wednesday up nearly 8%, finishing at $402.28.
Quick Facts
- Pomerantz LLP filed a class action lawsuit against Strategy, alleging the company misled investors about the profitability and risks of its Bitcoin strategy.
- The lawsuit claims Strategy failed to adequately disclose the impact of adopting ASU 2023-08 fair value accounting rules.
- Strategy reported $5.9 billion in unrealized losses in Q1 2025, which contributed to an 8% stock price drop.
- Despite the controversy, Strategy remains the largest corporate Bitcoin holder with 597,325 BTC on its balance sheet.
