The well-known law firm Pomerants LLP in New York has filed a class action lawsuit against Bitcoin corporate giant Strategy (formerly MicroStrategy), accusing the company of misleading investors and making false statements when disclosing its Bitcoin investment strategy and financial information, violating federal securities laws.
This lawsuit mainly represents investors who purchased Strategy stock between April 30, 2024, and April 4, 2025. The statement indicates that other eligible investors can apply to join this class action lawsuit before July 15.
Pomerants accuses Strategy of exaggerating its Bitcoin investment strategy and the profitability of its financial operations while deliberately downplaying the potential risks brought by Bitcoin's high volatility. The statement points out that this makes Strategy's public statements 'significantly misleading and false'.
The focus of the lawsuit also centers on the transition process of accounting standards by Strategy. The new accounting standard 'ASU 2023-08' issued by the Financial Accounting Standards Board (FASB) requires companies to account for cryptocurrency assets using the 'Fair Value Accounting' method, replacing the previous 'Cost-less-impairment' method, which only recognizes losses when asset prices fall but does not reflect book profits (unrealized gains) in financial statements.
Pomerantz claims that during the transition of accounting standards, Strategy did not truthfully disclose the specific impact of the new system on financial reports, even downplaying the risks that could arise for shareholders. The law firm's statement points out:
After adopting 'ASU 2023-08', the defendants continued to release optimistic assessments regarding Strategy's performance as a Bitcoin asset management company, including reports and forecasts of positive BTC investment returns (BTC Yield), unrealized gains (BTC Gain), and dollar-denominated gains (BTC $ Gain), but failed to disclose the substantial hidden book losses (unrealized losses) the company would face if calculated using fair value accounting.
The lawsuit specifically mentions that in the first quarter of this year, Strategy incurred a book loss of up to $5.9 billion due to the adoption of 'ASU 2023-08', and after the news broke, the stock price plummeted by more than 8%.
Since 2020, Strategy has heavily invested in Bitcoin and has now become the publicly traded company holding the most Bitcoin globally, currently holding a total of 597,325 Bitcoins.
Yahoo Finance data shows that Strategy's stock price has surged over 3,328% in the past 5 years, rising 7.76% on Wednesday, closing at $402.28 per share.
"Accused of exaggerating Bitcoin investment performance! Strategy faces a class action lawsuit from investors" was first published on (Block Customer).
