Strategy’s aggressive push into Bitcoin has won the company plenty of praise across the crypto industry but it might also be landing the firm in hot water.
A new class-action lawsuit has been filed in the U.S. District Court for the Eastern District of Virginia, taking aim at Strategy and several top executives, including founder and executive chairman Michael Saylor.
The suit represents investors who bought shares of Strategy between April 30, 2024, and April 4, 2025. The plaintiffs allege that the company misled shareholders about the risks and potential financial fallout tied to its Bitcoin-focused strategy.
From Business Software to Bitcoin Treasury
Since rebranding as a “Bitcoin Treasury Company,” Strategy has doubled down on its crypto vision. The firm has steadily accumulated Bitcoin, using money raised through debt, equity, and operating profits to build BTC into its primary reserve asset.
Along the way, Strategy even introduced new bitcoin-centric financial metrics like “BTC Yield” and “BTC Gain” to help investors track the performance of its big bet.
But the real trouble started with a significant change in how companies must account for crypto on their books.
New Accounting Rules Shine Light on Hidden Risks
On January 1, 2025, Strategy adopted ASU 2023-08, a new accounting standard that requires firms to report the fair market value of their crypto holdings. Under the new rule, companies have to reflect both unrealized gains and unrealized losses in their quarterly earnings reports.
Previously, Strategy used an accounting method that only recorded losses if Bitcoin’s price fell below its purchase price. Gains weren’t recognized at all unless the company sold its Bitcoin. This older method allowed Strategy to avoid showing swings in Bitcoin’s price on its income statements unless they triggered a sale or impairment.
Although Strategy did tell investors that the new accounting rule could affect its financials, the lawsuit claims the company seriously downplayed the potential impact. The complaint argues that the company continued to release bullish performance figures like BTC Yield and BTC Gain without disclosing how bad the downside could be under the new reporting standards.
$5.91 Billion Shock Revealed
The consequences of the new accounting rules became starkly clear on April 7, 2025. That’s when Strategy filed a report with the SEC, revealing it had suffered an unrealized loss of $5.91 billion on its bitcoin holdings for the first quarter.
The loss stemmed from both a decline in Bitcoin’s price and the new requirement to mark holdings to fair market value. The news sent Strategy’s stock down 8% almost immediately.
Weeks later, the company confirmed the staggering loss in its first-quarter earnings report, stating that volatility in Bitcoin’s price forced a significant markdown of its holdings under the new accounting rules.
According to the lawsuit, Strategy overstated the potential upside of its Bitcoin investments while failing to adequately warn investors of the risks, especially with the new accounting changes in play. The suit claims the company made false or misleading statements in violation of U.S. securities laws.
Now, the plaintiffs are seeking to hold Strategy accountable and to recover damages for investors who bought shares during the period in question.
Despite these legal challenges, Strategy formerly known as MicroStrategy remains the largest publicly traded corporate holder of Bitcoin. The firm currently holds nearly 600,000 BTC, valued at roughly $65 billion at today’s prices.
