Pomerantz Law Firm Sues MicroStrategy Over Alleged Misleading Bitcoin Strategy Claims
On Sunday, July 6, 2025, Pomerantz Law Firm announced the filing of a class action lawsuit against MicroStrategy Incorporated, operating as Strategy, and certain company officers.
The lawsuit, lodged in the United States District Court for the Eastern District of Virginia under docket number 25-5-v-0068, represents investors who purchased Strategy securities between April 30, 2024, and April 4, 2025. It seeks damages for alleged violations of federal securities laws under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.
MicroStrategy, a provider of enterprise analytics software and services, has shifted its focus since 2020 to acquiring and holding bitcoin as a core business strategy. By October 2023, the company branded itself as a “Bitcoin Treasury Company,” using funds from equity and debt financings, as well as operational cash flows, to amass bitcoin as its primary treasury reserve asset.
During the specified period, the company promoted its bitcoin strategy and introduced key performance indicators—BTC Yield, BTC Gain, and BTC S Gain—to evaluate its financial performance.
On January 1, 2025, MicroStrategy adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08, requiring public companies to measure crypto assets at fair value in financial statements, with changes in value reflected in net income. Previously, the company used a cost-less-impairment model, recognizing losses only during price declines without adjusting for increases unless assets were sold.
The lawsuit claims that MicroStrategy and its officers made misleading statements during the class period by overstating the profitability of its bitcoin strategy and understating risks tied to bitcoin’s volatility and potential losses under the new accounting rules.
On April 7, 2025, MicroStrategy reported a $5.91 billion unrealized loss on its digital assets for the first quarter of 2025 in a Securities and Exchange Commission filing, warning that profitability might not be regained if significant unrealized losses persisted. This disclosure led to an 8.67% drop in the company’s Class A common stock, falling $25.47 per share to close at $268.14.
On May 1, 2025, MicroStrategy confirmed the $5.9 billion unrealized loss in its first-quarter financial results, attributing it to the fair value accounting of its bitcoin holdings following a sharp decline in bitcoin’s value during the quarter.
