$40 Billion Crypto Strategy Under Fire as Lawsuit Exposes Risky Bets
Hedge funds playing fast-and-loose with digital assets? Stop the presses.
A major investment firm’s crypto gambit—once hailed as genius—now faces legal scrutiny that could unravel its entire position. The lawsuit alleges reckless exposure to volatile altcoins, with some positions down 70% from their 2024 peaks.
Wall Street’s latest ’innovative yield strategy’ looks suspiciously like gambling with other people’s money—again.
Strategy Faces Lawsuit Over Bitcoin Bet
According to Strategy’s filing with the SEC, the plaintiffs filed a class action lawsuit against the firm on May 16 against the company, its co-founder, Michael Saylor, the CEO, Phong Le, and Executive Vice President Andrew Kang. The lawsuit alleges that Strategy and its executives violated the Securities Exchange Act.
The plaintiff and class representative Anas Hamza claims on behalf of the class of investors that from April 30, 2024, to April 4, 2025, the defendants made false and misleading statements with respect to Strategy’s bitcoin Treasury.
The investors further allege that Strategy and its executives failed to disclose information about the anticipated profitability of its bitcoin-focused investment strategy and treasury operations. Saylor and his company are also accused of failing to disclose the various risks associated with BTC’s volatility and the magnitude of the losses.
The company and its executives plan to defend against these claims rather than reach a settlement. The plaintiffs are seeking unspecified damages, which extend to fees, costs, and other reliefs.
Strategy revealed the details of the lawsuit alongside its announcement of another Bitcoin purchase. The company, previously known as MicroStrategy, announced that it had acquired 7,390 Bitcoin for $764.9 million at an average price of $103,498 per BTC. The firm has also achieved a BTC yield of 16.3% year-to-date (YTD).
Saylor’s firm has now acquired a total of 576,230 BTC for $40.8 billion at an average price of $69,726 per BTC, making it the largest corporate Bitcoin holder.
BTC And MSTR Stock Rally Despite The Lawsuit
The Bitcoin price and MSTR stock rallied despite news of the lawsuit against Strategy. BTC surged from its intraday low at around $102,000 and closed May 19 above $105,000. Meanwhile, MSTR also enjoyed a 3% gain on the day, rallying above the psychological $400 level.
Analysts predict that the bitcoin price could soon hit a new all-time high (ATH), which is also bullish for the MSTR stock. Crypto analyst Titan of Crypto revealed that BTC has broken out of a clear bull pennant on the daily chart. He added that new all-time highs could be around the corner if this move holds. His accompanying chart showed that the flagship crypto could rally to as high as $112,000 on this breakout.
At the time of writing, the Bitcoin price is trading at around $105,500, up over 3% in the last 24 hours, according to data from CoinMarketCap.
