Michael Saylor in Legal Crosshairs: Law Firm Alleges Bitcoin Strategy Misled Investors
MicroStrategy's Bitcoin evangelist faces courtroom reckoning as attorneys claim 'materially false statements' about crypto investments.
Subheading: When HODLing becomes a legal liability
The lawsuit alleges Saylor's relentless Bitcoin promotion crossed into misleading territory—because nothing says 'sound investment strategy' like doubling down during a 70% price crash. Plaintiffs claim retail investors got burned following his 'hyperbolic' predictions of mainstream adoption.
Subheading: Bullish rhetoric meets bearish regulators
Legal filings cite Saylor's infamous 'Bitcoin is the exit strategy' quip as Exhibit A for alleged market manipulation. Meanwhile, institutional traders quietly profit from the volatility—proving once again that crypto's true use case remains separating retail investors from their money.
Lawsuit Alleges Strategy Misled Investors With Rosy Bitcoin Claims
The lawsuit claims the company’s public statements were “materially false and misleading,” creating a distorted picture of financial performance that failed to prepare investors for potential losses.
A key issue centers on Strategy’s adoption of new accounting rules under ASU 2023-08, which require fair value accounting for crypto assets.
Unlike the previous cost-less-impairment method, where bitcoin was only written down when prices fell and gains were recognized only upon sale, the new standard forces companies to mark assets to market prices each quarter.
Pomerantz alleges Strategy did not properly explain how these changes could impact its financial results, leaving investors in the dark about the potential for substantial unrealized losses.
"Strategy is a ponzi scheme!!"
Saylor’s savage reply: pic.twitter.com/401E56m5iY
The complaint highlights Strategy’s first-quarter 2025 earnings, in which the firm disclosed $5.9 billion in unrealized losses due to adopting the fair value accounting model.
That revelation triggered an 8% drop in Strategy’s stock price, underscoring the volatility risks the lawsuit says were previously glossed over.
Since shifting its corporate focus to bitcoin accumulation in 2020, Strategy, formerly MicroStrategy, has become the largest Bitcoin holder among publicly traded companies, amassing 597,325 BTC.
The strategy has fueled explosive gains in its share price, which has climbed more than 3,300% over the past five years.
That meteoric rise inspired several other firms, including Metaplanet, to emulate its Bitcoin-centric approach.
Legendary Short-Seller Slams Bitcoin Treasuries as ‘Financial Gibberish’
Last month, legendary short-seller Jim Chanos criticized the business model popularized by Michael Saylor’s Strategy, calling its approach “financial gibberish.”
Chanos noted that Strategy’s market capitalization now tops $100 billion, nearly double the roughly $60 billion worth of Bitcoin it holds on its balance sheet.
Saylor has defended Strategy’s valuation, arguing that the company’s ability to raise capital at a premium effectively renders its strategy “risk-free.” Chanos, however, rejected that logic outright.
“There’s a wonderful sales job that’s being done about the fact that this is an economic engine in and of itself,” he said.
Matthew Sigel, head of digital asset research at VanEck, has also voiced concerns over the Bitcoin treasury strategies adopted by some publicly traded firms, warning that aggressive BTC accumulation could ultimately hurt shareholders.
