Strategy and co-founder Michael Saylor face class action lawsuit involving alleged federal securities law violations

Bitcoin treasury company Strategy and its co-founder, Michael Saylor, are facing a class action lawsuit from investors who say the company made "materially false and misleading statements" about its profitability.Through the law firm, Pomerantz LLP, Anas Hamza, along with other investors, filed that lawsuit on Friday in the U.S. District Court for the Eastern District of Virginia. The lawsuit alleges Strategy embellished its forecasted profitability of its "bitcoin-focused investment strategy" and risks tied to bitcoin's volatility, and is focused on the period between April 2024 and April 2025."As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages," according to the complaint.CEO Phong Le and Chief Financial Officer Andrew Kang are also listed as defendants.As of Monday morning, Strategy says it holds a total of 576,230 BTC — worth over $59 billion — bought at an average price of $69,726 per bitcoin for a total cost of around $40.2 billion. Bitcoin's price has ebbed and flowed over the past few weeks, and as of Monday morning was hovering close to $104,000.The lawsuit says Strategy adopted Financial Accounting Standards Board standards at the beginning of 2025, which requires public companies to "measure their crypto assets at fair value in their financial statements, with gains and losses from changes in the fair value of those assets recognized in net income in each reporting period," called ASU 2023-08. Before that, Strategy used a different model, which meant that the firm just "needed to recognize impairments in the event of price depreciations and would not mark up for price increases unless the assets were sold," according to the complaint."Defendants consistently provided rosy assessments of Strategy’s performance as a bitcoin treasury company following its adoption of ASU 2023-08. They did this, in part, by reporting and projecting positive BTC Yield, BTC Gain, and BTC $ Gain results, while omitting the immense losses the Company could realize on its bitcoin assets after accounting for these assets under a fair value accounting methodology," those investors alleged.Strategy did not respond to a request for comment. The firm addressed the class action lawsuit in an SEC filing on Monday."The complaint seeks unspecified damages to the class, interest, attorneys’ fees, costs, and other relief," the firm said. "We intend to vigorously defend against these claims. At this time, we cannot predict the outcome, or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter."Strategy's stock price (ticker MSTR) traded higher by 1.8% at publication time.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.