Crypto Strategy Implodes: $6B Bitcoin Losses Spark Investor Lawsuits and Allegations of Deception

Another 'stable' investment strategy just face-planted into crypto's volatility wall—hard. This one left a $6 billion crater.

Lawyers are now circling what remains of the wreckage, armed with lawsuits alleging investors got fed a carefully crafted fantasy. The playbook? Predictable: overpromise, underdeliver, then blame 'market conditions.'

Bitcoin giveth, Bitcoin taketh away—usually from whoever underestimated its ability to vaporize nine-figure positions before lunch.

Meanwhile, the usual suspects in finance are already pitching this disaster as a 'learning opportunity.' Translation: someone's prepping a new fund with 2% management fees to 'help' victims recover their losses.

Stock gains amid legal scrutiny

Strategy shares are up 28% year-to-date through all the legal headwinds, signaling continued investor confidence in its Bitcoin accumulation strategy. The firm now has 592,345 BTC worth more than $63 billion. Strategy has an average purchase price of $70,702 per coin, and Bitcoin is trading at $106,824, an unrealized gain of $21.3 billion, roughly a 51% gain.

The founder and chairman of Strategy, Michael Saylor, remained the largest individual shareholder. He owns close to 20 million shares as of the last SEC filing, which translates to approximately $7.8 billion using the current stock price of $389.50 per share. Other significant shareholders are Vanguard (8.55%), BlackRock (5.80%), Capital International Investors (5.80%), Susquehanna Securities (4.82%), and Jane Street Group (4.70%).

Despite the growing scrutiny, the company has maintained the same long-term approach to Bitcoin, which involves frequent buy-ups no matter the market conditions, and it has new fiscal backing as a result. Strategy shares ($MSTR) are trading at $393.24 and have a market cap of $107.51 billion, a premium of 1.67x over its net asset value.

Profit warning sparked filing surge

The lawsuits continued to gain traction following revelations by Strategy in April that it was expected to report no profit on Q1, attributed to unrealized losses in Bitcoin. The company cautioned in an SEC filing that it “may not be able to regain profitability in future periods.” Strategy recorded a loss of $16.49 per share in Q1.

The initial class action was filed on May 16 by Pomerantz LLP, followed by individual actions by Gross Law Firm, Bronstein Gewirtz & Grossman, Kessler Topaz Meltzer & Check, and Levi & Korsinsky. The possibility of seeing numerous claims instead of a unified lawsuit indicates a clash of legal interests and confusion among the major stakeholders who should take the initiative.

So far, none of the top institutional holders of Strategy has attested to participating in any of the suits. The result may shape wider market attitudes toward corporate exposure and disclosure on Bitcoin, especially when insider trading allegations become material.

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