Investors Take Bitcoin Strategy to Court Over Murky Disclosures—Because Nothing Says ’Trust Us’ Like a Lawsuit

Crypto’s favorite buzzword—’transparency’—gets put to the test as shareholders allege a Bitcoin investment strategy played hide-the-ball with key details. Turns out ’decentralized’ doesn’t mean ’opaque,’ at least not when institutional money’s on the line.

Plaintiffs claim the fund’s disclosures were about as clear as a Bitcoin whitepaper after three espresso martinis—leaving investors guessing whether they bought a hedge or a hype train.

Bonus jab: If Wall Street ran on blockchain time (’three to five business days’ means ’maybe Q3’), even Satoshi would demand a refund.

In brief

• Michael Saylor, co-founder of Strategy (formerly MicroStrategy), is facing a class-action lawsuit over alleged violations of federal securities laws.
• Investors, represented by the law firm Pomerantz LLP, accuse the company of concealing the actual risks tied to its Bitcoin investment strategy.
• The complaint targets a key period from April 2024 to April 2025, during which Strategy allegedly issued “materially false and misleading” statements.
• The case could set a legal precedent and reignite the debate around financial transparency for companies heavily exposed to crypto assets.

A Class Action Lawsuit Against Strategy: Serious Accusations on Financial Transparency

On May 16, a class action lawsuit was filed in the Eastern District of Virginia Federal Court by a group of investors, represented by the law firm Pomerantz LLP, against Strategy, its co-founder Michael Saylor, its CEO Phong Le, and its CFO Andrew Kang.

Indeed, the plaintiffs accuse the company of having made statements that were “materially false and misleading” about its bitcoin investment strategy. According to them, these claims concealed the reality of the risks associated with BTC volatility, which misled investors during a critical period from April 2024 to April 2025.

Here are the main elements the executives are accused of in the complaint:

• “Misleading statements about the profitability of the company’s Bitcoin strategy“, according to the text of the lawsuit;
• An omission of risks related to the extreme volatility of BTC;
• The communication of financial targets deemed “excessively optimistic” and disconnected from the real risks incurred;
• Manipulation of public perception through incomplete performance forecasts, particularly in the period following the adoption of new accounting standards;
• The alleged financial harm: the plaintiffs claim to have suffered “significant losses” related to the drop in Strategy (MSTR) stock following these practices.

This lawsuit demands unspecified compensation, including reimbursement of legal fees and interest.

For its part, the company did not wish to comment publicly but filed a formal response with the SEC, in which it states:

We intend to vigorously contest these allegations. At this stage, it is impossible for us to estimate the outcome or potential losses related to this matter.

Despite this news, MSTR stock is currently showing a 3.41% increase, a sign of a market still uncertain about the real impact of this procedure.

Accounting Standards in the Spotlight: A Biased Reading of Bitcoin Valuation?

At the heart of the dispute is also the adoption, at the beginning of 2025, of new accounting standards issued by the Financial Accounting Standards Board (FASB), known as ASU 2023-08.

These standards now require public companies to account for their cryptos at their “fair market value“, that is, to reflect price increases and decreases in real time in their quarterly net income.

According to the plaintiffs, Strategy took advantage of this change to produce excessively optimistic performance reports.

The lawsuit points out that “the defendants have systematically provided enthusiastic assessments of Strategy’s performance as a bitcoin treasury company after the adoption of ASU 2023-08“, highlighting metrics like BTC Yield, BTC Gain, and BTC $ Gain, while “silencing the immense losses the company could incur“.

Before the implementation of this standard, companies were only required to recognize losses (and not gains) on the valuation of their bitcoins, except in the event of a sale. Strategy could therefore have used ASU 2023-08 to show spectacular gains without giving a true picture of the real risks, especially in an equally volatile market.

With an average BTC acquisition cost of $69,726 and a price fluctuating around $104,000, the company shows an impressive latent capital gain. However, this dynamic could reverse at any time. The lawsuit therefore points to questionable management of information, likely to have misled investors about the financial soundness of the Strategy model.

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