The securities fraud lawsuits facing Michael Saylor’s company Strategy could take years to play out — if they go anywhere at all, according to legal experts.
Strategy, formerly MicroStrategy, pioneered the use of Bitcoin (BTC) as an asset reserve for corporate treasuries. The company has been since 2020 making regular purchases of Bitcoin, with over 601,550 BTC in its balance sheets and no plans to cap the accumulation.
Now, Strategy has investors questioning its crypto approach. As of mid-July, at least seven law firms have filed complaints against Strategy. Many of the complaints have similar claims, echoing that the defendants overstated the anticipated profitability of its Bitcoin investment strategy and understated volatility risks, as well as the magnitude of losses the company could recognize following the adoption of the ASU 2023-08 accounting principles.
During the first three months ended March 31, 2025, the company recorded an unrealized fair value loss on digital assets of $5.9 billion.
In an interview with Cointelegraph, crypto lawyer Tyler Yagman, an associate at The Ferraro Law Firm, said the securities dispute could become “multi-year process.” What we see […], a lot of times these class actions are filed, they end up kind of spurring out and not going anywhere.”
‘Zealous plaintiffs firms looking for a hook to latch onto’
At least one claim mentions Strategy’s 8.7% share price drop on April 7. That drop was preceded by the disclosure of a nearly $6 billion unrealized loss on the company’s digital assets. The disclosure occurred in an 8-K filing to the SEC, wherein Strategy wrote, “[w]e may not be able to regain profitability in future periods, particularly if we incur significant unrealized losses related to our digital assets.”
Brandon Ferrick, general counsel for Web3 infrastructure company Duoro Labs, labeled the legal cases as “super common,” noting that investments disclosures “are hard to get right, especially in nascent industries like crypto.”
“Plantiffs are alleging that profitability was overstated and that risks were understated — not that these things were entirely absent from disclosures. It’s just zealous plaintiffs firms looking for a hook to latch onto.”
Cointelegraph reached out to Strategy, but hadn’t received a response at time of publication.
The class action lawsuits have not stopped Strategy from continuing its Bitcoin (BTC) accumulation. On Monday, the company bought another $472 million worth of BTC. On Thursday, it hit an all-time high market capitalization, news that Strategy executive chairman Michael Saylor shared on X.
“There’s obviously hurdles that these that these class action firms are going to have to overcome, and that remains to be seen.”
Law firms involved in complaints against Strategy include Pomerantz LLP, Robbins Geller Rudman & Dowd LLP, Glancy Prongay & Murray LLP, The Schall Law Firm, Kessler Topaz Meltzer & Check LLP and Bronstein, Gewirtz and Grossman LLC, among others.
Related: MicroStrategy’s Bitcoin debt loop: Stroke of genius or risky gamble?
Related: Bitcoin bear Vanguard is now the largest shareholder of Strategy
Transparency key for crypto treasury companies
The crypto space has entered a new era with the launch of Bitcoin exchange-traded funds (ETFs) in January 2024, with growing institutional capital entering the industry. As a result, investors demand for transparency around corporate crypto holdings is rising, according to Yagman.
“We’re now seeing an emergence of crypto-based treasury companies that operate like actively managed ETFs, but in a company structure […], he said, adding that “management team needs to be as transparent as humanly possible and as direct as humanly possible, because you’re dealing with a market segment that is known to be volatile.”
Strategy’s earnings for the second quarter of 2025 are scheduled to be released July 31, according to the company’s website. Analysts surveyed by TipRanks expect an earnings per share (EPS) of -0.10, following a sharp miss last quarter when the company posted a -16.53 EPS for Q1.
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