MicroStrategy, the largest corporate holder of Bitcoin led by Michael Saylor, is facing a class action lawsuit filed by law firm Pomerantz LLP. The lawsuit accuses the company of hiding important facts and misleading investors about the profits and risks of its Bitcoin strategy.
What the Lawsuit Says
The lawsuit, filed in Virginia's Eastern District Court, claims that MicroStrategy misled investors from April 30, 2024, to April 4, 2025. According to the law firm, the company gave the impression that its Bitcoin investments were highly profitable while hiding key risks like price volatility and changes in accounting rules.
Pomerantz alleges that both MicroStrategy and its CEO, Michael Saylor, focused on positive metrics such as BTC Yield and BTC Gain but failed to discuss real dangers, including the potential for major losses.
The lawsuit claims that the company omitted critical details that investors needed to fully comprehend the risks involved.
Issues with New Accounting Rules
A significant aspect of this case is MicroStrategy's shift to new crypto accounting rules known as ASU 2023-08. This new rule requires companies to show the real-time value of their Bitcoin holdings, rather than just the cost minus past losses.
Previously, MicroStrategy only reported losses when Bitcoin prices fell, without reflecting gains until coins were sold. Under the new rules, it became evident that the company faced an unrealized loss of $5.9 billion in early 2025.
However, this revelation led to a stock price decline of over 8% in a short period, startling many investors.
Overall Bitcoin Holdings of the Company
MicroStrategy has been a major player in the crypto market since 2020 and holds over 597,000 Bitcoins, valued at around $65.85 billion, making it the largest public holder of Bitcoin.
Its stock has increased by over 204% in the past year, inspiring other companies like Metaplanet to follow suit. Despite recent gains, including a 7.7% rise to $402.28, the lawsuit adds substantial pressure on MicroStrategy.
With a July 15 deadline for investors to join the case, there are growing questions: Were the Bitcoin boom and the associated benefits too good to be true?
The situation faced by MicroStrategy highlights the risks associated with cryptocurrency investments and the need for greater transparency towards investors regarding potential losses. The lawsuit also questions the company’s resilience in an unpredictable market.
