Michael Saylor Faces $5.9B Bitcoin Bloodbath: MicroStrategy Hit With Class-Action Lawsuit
MicroStrategy’s billion-dollar Bitcoin bet just backfired—spectacularly. Shareholders are now dragging Michael Saylor to court, alleging reckless crypto gambling with corporate funds.
The $5.9 billion question: When does conviction become negligence?
HODL culture meets shareholder revolt as the lawsuit claims Saylor "doubled down like a degenerate Vegas tourist" during BTC’s 2022 collapse. The corporate treasury’s transformation into a leveraged crypto hedge fund didn’t sit well with investors watching their equity vaporize.
Legal experts suggest this could set precedent for how publicly traded companies handle—or mishandle—crypto allocations. Meanwhile, Bitcoin maximalists shrug: "Volatility is a feature, not a bug."
Wall Street analysts chuckle into their spreadsheets—another cautionary tale of tech bros playing banker. As one fund manager quipped: "When your CFO starts using ‚laser eyes‘ on Twitter, it’s time to sell."
New Accounting Rules Expose Hidden Risks
On January 1, 2025, Strategy adopted ASU 2023-08, a new accounting rule requiring companies to report the fair value of crypto assets. Under the new guideline, both unrealized gains and losses must now be included in its quarterly earnings.
Before this change, Strategy used a more limited method where it only recorded losses if bitcoin’s price fell below the purchase price, and gains were not recognized unless the assets were sold. This allowed the company to avoid showing negative swings in BTC’s market price in its income statements, unless triggered by a sale or impairment.
While Strategy told investors the new rule could impact results, the lawsuit alleges the company downplayed the scale of the risk, continuing to release bullish performance indicators like BTC Yield and BTC Gain without showing the full downside.
The impact came to light on April 7, 2025, when Strategy filed a report with the SEC revealing a $5.91 billion unrealized loss on its bitcoin holdings for the first quarter. The loss was tied to both the price drop in Bitcoin and the shift to fair value accounting and triggered an 8% drop in Strategy’s stock.
Strategy confirmed the loss in its Q1 earnings report weeks later, stating that the company’s BTC holdings had to be marked down due to market volatility under the new accounting method.
According to the complaint, the firm overstated the upside of its BTC holdings and failed to clearly warn investors about the risks, especially under the new accounting rules. It accuses the company of making false or misleading statements in violation of U.S. securities laws.
The lawsuit now seeks to hold Strategy accountable and recover damages for investors who bought Strategy’s stock during the period.
Despite the legal troubles, MicroStrategy remains the largest corporate holder of Bitcoin, with nearly 600,000 BTC still on its balance sheet, worth approximately $65 billion at current prices.
