MicroStrategy Faces Five Class-Action Lawsuits for Allegedly Overstating Bitcoin Profitability

• Why Are Five Law Firms Suing MicroStrategy Over Its Bitcoin Strategy?
• The Domino Effect: How One SEC Filing Triggered a Legal Avalanche
• U.S. Law Firms’ Playbook: Why They Rush to Sue Public Companies
• FAQ: Your MicroStrategy Lawsuit Questions Answered

In a dramatic turn of events, MicroStrategy (now rebranded as Strategy) has become the target of five high-profile class-action lawsuits in the U.S. since May 2025. The lawsuits allege that the company misled investors by overstating the profitability of its bitcoin investment strategy and failing to disclose critical risks. The legal actions, led by firms like Pomerantz LLP—known for its billion-dollar win against Petrobras—claim MicroStrategy’s optimistic projections were "false and misleading." The fallout began in April 2025 when an SEC filing revealed a staggering $5.91 billion unrealized loss from Bitcoin holdings, causing the stock to plummet 8.67%. This article dives into the lawsuits, the allegations, and the broader trend of U.S. law firms scrutinizing public companies for securities violations.

Why Are Five Law Firms Suing MicroStrategy Over Its Bitcoin Strategy?

Strategy (NASDAQ: MSTR), which rebranded from MicroStrategy and bills itself as a "Bitcoin Treasury Company," is under fire from five heavyweight U.S. law firms. The lawsuits, filed on behalf of investors who bought the company’s stock between April 2024 and April 2025, accuse the firm of securities fraud. At the heart of the allegations: MicroStrategy allegedly inflated the expected returns of its Bitcoin purchases while downplaying risks tied to mandatory accounting changes. The lawsuits name CEO Michael Saylor and other executives, claiming they failed to disclose how a new accounting rule would force the company to report Bitcoin holdings at fair market value—a shift that exposed a $5.91 billion Q1 2025 unrealized loss. The stock’s 8.67% drop on April 7, 2025, after the SEC filing, is cited as proof that earlier rosy statements were "materially false."

The Domino Effect: How One SEC Filing Triggered a Legal Avalanche

The lawsuits hinge on a critical April 2025 SEC disclosure where Strategy admitted it might never recover profitability due to Bitcoin volatility. Pomerantz LLP’s filing spells it out: "The truth emerged when Strategy revealed its colossal unrealized losses and warned of potential insolvency—rendering prior claims about ‘minimal risk’ fraudulent." Other firms like Gross Law and Levi & Korsinsky echo this, arguing MicroStrategy’s omission of risk factors violated federal securities laws. Notably, the complaints highlight how the company’s pivot to Bitcoin-heavy reporting (a strategy pioneered by Saylor) backfired when accounting standards caught up.

U.S. Law Firms’ Playbook: Why They Rush to Sue Public Companies

This isn’t just about MicroStrategy—it’s a window into how specialized U.S. law firms operate. When a stock tanks post-bad news, firms scramble to recruit a "lead plaintiff" (typically the investor with the heaviest losses) to front class actions. As the BTCC team notes, "It’s a profit-driven ecosystem: firms bank on settlements or verdicts, often taking 20–30% of recoveries." The MicroStrategy case exemplifies this, with five firms jockeying to lead the charge. Their simultaneous investigations and press releases? Just marketing to attract clients.

FAQ: Your MicroStrategy Lawsuit Questions Answered

What are the lawsuits accusing MicroStrategy of?

The lawsuits allege MicroStrategy violated securities laws by overstating Bitcoin investment returns and hiding risks tied to accounting changes, misleading investors between April 2024 and April 2025.

Which law firms are involved?

Pomerantz LLP, Gross Law Firm, BG&G LLC, Kessler Topaz Meltzer & Check, and Levi & Korsinsky have filed separate class actions.

What triggered the stock drop?

An April 2025 SEC filing revealed $5.91 billion in unrealized Bitcoin losses and warnings of potential insolvency, causing an 8.67% share price plunge.

Could MicroStrategy face financial penalties?

If found liable, the company might pay damages to investors. Historical cases (e.g., Petrobras’ $3B settlement) suggest high stakes.