Strategy Boosts STRC Offering Twice in a Week
Bitcoin (BTC) treasury company Strategy has significantly expanded its STRC (Variable Rate Series A Perpetual Stretch Preferred Stock) offering, revising its scope twice since its launch on July 22.
STRC Offering Details
The company announced an at-the-market offering of up to $4.2 billion of STRC on Thursday, intending to use the funds to acquire more BTC. STRC is a unique corporate security that pays variable dividends and has no fixed maturity date. The company retains the option to call or redeem the stock under certain conditions, providing repayment flexibility.
Initially, Strategy aimed to raise $500 million through STRC, priced at $100 per share. However, just two days after the initial public offering (IPO), the company increased the target to $2 billion, using the proceeds to purchase over 21,000 BTC.
Market Reaction and Concerns
Strategy's aggressive BTC acquisition strategy, funded by debt and equity, continues to spark debate within the crypto and investment communities. Some analysts caution that Strategy and similar BTC treasury plays could represent bubbles that may eventually burst, potentially destabilizing crypto markets.
Investor Lawsuits
Strategy faces multiple lawsuits from investors alleging misrepresentation of Bitcoin's volatility risks and profit projections. Attorneys are divided on the merits of these claims, with potential resolution years away.
Brandon Ferrick, an attorney following the cases, noted that plaintiffs argue profitability was overstated and risks were understated, rather than completely omitted from disclosures.
Key Allegations
- Use of deceptive alternative financial metrics
- Disguising financial losses with unconventional accounting methods
- Introduction of new KPIs like BTC Yield, BTC Gain, and BTC dollar Gain
Saylor's Defense
Strategy co-founder and Bitcoin advocate Michael Saylor has defended the company’s business model, asserting that Strategy is often misunderstood and undervalued.
"We’re capitalized on the most innovative technology and asset in the history of mankind; on the other hand, we’re possibly the most misunderstood and undervalued stock in the US and potentially the world," Saylor stated during a recent earnings call.
Disclaimer: Investing in cryptocurrencies involves risk. Conduct thorough research and consult a financial advisor before making investment decisions.