Legal Action Lodged Against MicroStrategy Over Bitcoin Losses by Pomerantz Law Firm

Pomerantz Law Firm Initiates Class Action Against MicroStrategy

On June 1, 2025, Pomerantz LLP declared that it has filed a class action lawsuit against MicroStrategy Incorporated, commonly referred to as Strategy (NASDAQ: MSTR), along with certain officers of the company. This lawsuit, lodged in the United States District Court for the Eastern District of Virginia, targets all individuals and entities that purchased or acquired Strategy securities between April 30, 2024, and April 4, 2025—a period defined as the 'Class Period.' The lawsuit seeks to recover damages resulting from the defendants’ purported violations of federal securities laws, particularly focusing on Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and associated rules.

Call for Investors to Join the Action

Investors who bought or acquired Strategy securities during the Class Period have until July 15, 2025, to motion for their appointment as Lead Plaintiff within this class action. Those interested in participating can download a copy of the Complaint from Pomerantz Law Firm's website. To gain further insight or discuss aspects of this lawsuit, investors may reach out to Danielle Peyton either via phone at 646-581-9980 or through email communication. It is suggested that inquiries are accompanied by a mailing address, a contact number, and information regarding the number of shares purchased.

Background on MicroStrategy’s Bitcoin Strategy

Strategy, along with its subsidiaries, specializes in delivering enterprise analytics software and services supported by artificial intelligence technology. The company's pivot towards accumulating Bitcoin as a primary reserve asset began in 2020. By October 2023, this strategy became central to its operations, prompting a rebranding as a 'Bitcoin Treasury Company.' This evolved approach involved using proceeds from equity and debt financing, in addition to operational cash flows, to bolster Bitcoin reserves.

During the Class Period, company executives frequently showcased Strategy’s Bitcoin-oriented investment strategy and treasury management. New performance metrics including 'BTC Yield,' 'BTC Gain,' and 'BTC $ Gain' were introduced to provide greater transparency around its financial accomplishments.

Key Accounting Shifts and Their Implications

On January 1, 2025, the firm adopted the Financial Accounting Standards Board's (FASB) ASU 2023-08, which mandates that publicly traded companies assess their crypto assets at fair value and disclose any gains or losses in their financial statements. This guideline seeks to enhance clarity and accuracy regarding the valuation of digital assets. Prior to this, Strategy used a cost-less-impairment model which restricted its recognition of asset value depreciation while not allowing for increases unless these digital assets were sold.

Despite assurances that the adoption of ASU 2023-08 would positively influence their financial reporting, defendants did not provide sufficient clarity about how significant those effects would be. They also understately communicated the inherent risks tied to Bitcoin volatility. Public statements were predominately optimistic, focusing on supposed gains while neglecting to mention potential substantial losses that could occur after transitioning to fair value accounting.

Consequences of Market Disclosure

On April 7, 2025, after implementing ASU 2023-08, Strategy revealed via the U.S. Securities and Exchange Commission that it recognized an unrealized loss of approximately $5.91 billion during the first quarter of 2025, fundamentally altering investor perception. This contributed to a notable drop in Strategy's Class A stock, which plummeted by $25.47 (~8.67%), closing at $268.14 per share.

The financial results released on May 1, 2025, reiterated this massive valuation loss, prompting concerns about the company’s ongoing ability to maintain profitability, especially considering the volatile nature of cryptocurrency assets.

Pomerantz Law Firm's Legacy

Recognized as a leading firm in corporate, securities, and antitrust class litigation, Pomerantz LLP was founded by Abraham L. Pomerantz, who is celebrated for pioneering securities class actions more than 85 years ago. The firm continues to champion the rights of victims affected by securities fraud, corporate misconduct, and breaches of fiduciary duty, having facilitated numerous recoveries totaling billions in damages for class members. You can explore more about their work at Pomerantz Law Firm.

Conclusion

As this class action progresses, investors are reminded to stay vigilant and informed regarding the developments surrounding their entitlements and the broader implications for MicroStrategy's strategic direction in the cryptocurrency realm.