Strategy Investors Drop Class Action Over Bitcoin Accounting
Strategy Inc. Faces No Trial as Investors Drop Lawsuit
Investors in Strategy Inc., a company known for its substantial Bitcoin treasury, have voluntarily withdrawn a proposed class action lawsuit. The suit alleged that the company and its executives misled shareholders about the risks associated with their Bitcoin-focused investment strategy and a recent accounting rule revision.
The Initial Allegations
The lawsuit, led by Anas Hamza, was filed in the US District Court for the Eastern District of Virginia. Named defendants included Strategy Inc., co-founder Michael J. Saylor, CEO Phong Le, and CFO Andrew Kang. The plaintiffs claimed violations of federal securities laws, specifically Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934.
- The core claim was that Strategy Inc. downplayed the financial risks of its aggressive Bitcoin accumulation strategy.
- Plaintiffs also alleged inadequate disclosure regarding the potential impact of adopting Accounting Standards Update (ASU) No. 2023-08. This update requires companies to mark crypto assets at fair market value and report fluctuations directly in earnings.
Voluntary Dismissal
According to a Bloomberg Law report, the lead plaintiffs and a shareholder have now voluntarily dismissed their claims against Strategy Inc. and its executives through a joint agreement. The dismissal is “with prejudice” to the named plaintiffs, preventing them from refiling the same claims. However, this does not extend to potential absent class members.
The lawsuit, which covered the period from April 30, 2024, to April 4, 2025, sought unspecified damages and legal fees. Strategy Inc. had previously stated its intention to vigorously defend itself, asserting that its disclosures about Bitcoin-related risks and accounting practices were accurate.
Implications for Strategy Inc.
This voluntary dismissal averts a potentially lengthy legal battle for Strategy Inc., a major Bitcoin treasury holder. The company had recently financed another Bitcoin purchase through a stock sale, issuing shares worth $359 million to acquire 3,081 BTC.
As of the time of writing, Strategy Inc.’s Bitcoin holdings total 632,457 BTC, valued at approximately $68.5 billion. MSTR is currently trading at $334.41, reflecting a price decrease of 4.43% in the last day and 10.23% in the last five days.