MicroStrategy Faces Prolonged Securities Fraud Challenges Despite Bitcoin Strategy

According to legal experts, the securities fraud lawsuits targeting Michael Saylor’s MicroStrategy (Strategy) could evolve into an extensive, multi-year process, with significant uncertainty of resolution.

Strategy, recognized for pioneering corporate treasury investment in Bitcoin (BTC), continues to accumulate the cryptocurrency. As of mid-July, at least seven law firms initiated complaints, alleging defendants overstated the profitability of the Bitcoin investment strategy and understated volatility risks and potential losses, issues also attributed to the adoption of ASU 2023-08 accounting principles.

Financial Disclosure and股价波动

A significant concern revolves around disclosures made in March 2025, whereby the company reported a $5.9 billion unrealized loss on its BTC holdings during the first quarter. An April 7, 2025, 8.7% share price drop was preceded by this disclosure, which also included a forward-looking statement acknowledging potential future profitability impairment due to unrealized crypto losses.

Cryptolegal counsel Tyler Yagman suggested these securities disputes might become “a multi-year process,” and are examples of “spurring out [and] not going anywhere.” Noting the large size of disclosures filed doesn’t necessarily mean they succeed if the content relies on allegations common for nascent industries like crypto according to Brandon Ferrick, General Counsel at Duoro Labs.

“Plaintiffs are alleging that profitability was overstated and that risks were understated — not that these things were entirely absent from disclosures. It’s just zealous plaintiffs firms looking for a hook to latch onto.”
— Brandon Ferrick, Duoro Labs

Legal Proceedings Persist

The legal challenges have not hindered Strategy. Following the filing of several lawsuits, the company recently executed significant Bitcoin purchases. On Monday (July 8th), a $472 million BTC purchase was made, and the company concurrently hit an all-time market capitalization high, an achievement shared by Executive Chairman Michael Saylor.

Law firms involved include Pomerantz LLP, Robbins Geller Rudman & Dowd LLP, Glancy Prongay & Murray LLP, The Schall Law Firm, Kessler Topaz Meltzer & Check LLP, and Bronstein, Gewirtz and Grossman LLC.

“There’s obviously hurdles that these that these class action firms are going to have to overcome, and that remains to be seen.” [This concluding sentence appears incomplete in the original text and lacked standard attribution; the summary below is based on Yagman’s overall assessment typical for these matters.]

Transparency Essential in Crypto Treasury Context

Commentary indicates transparency should be paramount for companies managing significant crypto treasury assets, especially in the evolving regulatory landscape following the introduction of Bitcoin ETFs. Yagman notes that management should offer “as transparent and direct as humanly possible” communication given crypto’s volatility.

Amid the legal scrutiny, analysts prepare for Strategy’s upcoming Q2 2025 earnings release (scheduled for July 31st). An EPS expectation of -$0.10 has been set, representing a predicted significant shortfall following the -$16.53 EPS reported in Q1.

Potential for Prolonged Legal Battles

The path toward resolution for these lawsuits is expected to be circuitous: filing in multiple jurisdictions, discovery battles, potential dismissals based on rulings regarding ASU-related accounting, class certification challenges, and ultimately courts making determinations on the merits of the claims. While eventual resolution is unavoidable, the pace suggests years of litigation ahead, with the specific outcome, if definitive, possibly evolving further through appeals.