Class Action Lawsuit Against MicroStrategy Over $5.9 Billion Loss
MicroStrategy, a significant player in the Bitcoin market, is facing a class action lawsuit from the New York law firm Pomerantz LLP. The suit revolves around suspicions of a staggering $5.9 billion loss attributed to the company’s financial management and strategies related to Bitcoin.
Pomerantz filed the lawsuit in the Eastern District of Virginia on July 2nd, challenging what they call a “micro-strategy,” aiming to represent investors who claim they were misled about the company’s financial health during the trading period between April 30, 2024, and April 4, 2025. The allegations suggest that the firm violated federal securities laws by overstating profitability and misrepresenting risk associated with its Bitcoin investments.
To give some context, a class action allows a group of individuals who have experienced similar grievances to seek justice collectively, which seems particularly relevant here. The lawsuit raises questions regarding the company’s compliance with the new Accounting Standards Board’s guidelines set to take effect on January 1, 2025.
This new rule—ASU 2023-08—demands that public companies transparently report their crypto asset values, accounting for unrealized profits and losses. Previously, MicroStrategy utilized what they termed the Costless Disorder Accounting Model. This meant that losses would only be recorded if Bitcoin’s price dipped below its acquisition cost and only upon selling. As a result, significant price drops would go unreported unless accompanied by a sale.
The lawsuit further claims that MicroStrategy downplayed the risks associated with this new accounting model while still projecting optimistic earnings, even stating it would significantly impact their financial statements.
Particularly concerning is the reported $5.91 billion unrealized loss on Bitcoin during the first quarter of 2025, largely due to the adoption of this new accounting model alongside a drop in Bitcoin’s prices. Following the news of the lawsuit, MicroStrategy’s stock fell by 8% as of April 7th, signaling investor concerns.
This isn’t the first legal challenge for MicroStrategy; there are about five similar lawsuits underway, including one from the law firm Levi & Korsinsky. Despite these challenges, co-founder and executive chairman Michael Saylor remains optimistic about Bitcoin’s future, even predicting it could skyrocket to $13 million by 2045.
As of now, the company holds nearly 600,000 BTC, valued at over $65 billion, making it the largest publicly traded holder of Bitcoin. MicroStrategy’s stock closed at $403.99 on June 3, marking a slight increase on that day.
We reached out to MicroStrategy for comment regarding these developments but, as of now, have not received a response. We will provide updates as they become available.
