Bitcoin-focused investment firm Strategy and its co-founder Michael Saylor are facing a class action lawsuit alleging they violated federal securities laws.
Investors allege the company made “materially false and misleading statements” about its profitability.
Plaintiff Anas Hamza and other investors filed the lawsuit Friday in the U.S. District Court for the Eastern District of Virginia through the law firm Pomerantz LLP. The lawsuit specifically covers the period from April 2024 to April 2025 and alleges that Strategy overstated the profitability of its “Bitcoin-focused investment strategy” and the risks associated with Bitcoin’s volatility.
“As a result of the defendants’ unlawful acts and negligence and the sudden decrease in the market value of the company’s securities, the plaintiff and other community members have suffered significant damage,” the complaint stated.
Not only Saylor, but also the company's CEO Phong Le and CFO Andrew Kang are among the defendants in the lawsuit.
The complaint also notes that Strategy adopted the Financial Accounting Standards Board’s (FASB) new regulation, ASU 2023-08, at the beginning of 2025. This regulation requires public companies to report cryptocurrencies at fair value in their financial statements and reflect these value changes in the income statement. Strategy previously used an accounting model that only recognized losses on decreases in value and did not consider increases in value unless sales occurred.
Investors claim that the company has been presenting unrealistic and optimistic performance evaluations to the public even after switching to the new accounting standard. The company is alleged to have disregarded the huge losses that could have occurred after fair valuation while sharing positive figures such as “BTC Return,” “BTC Earnings,” and “BTC Dollar Earnings.”
Strategy did not issue a press release on the matter, but did address the lawsuit in an SEC filing on Monday:
“The complaint seeks unspecified damages, interest, attorneys' fees and other legal expenses on behalf of the community. We intend to vigorously defend against these claims. It is not possible for us to predict the outcome of this lawsuit or estimate potential damages at this time.”
*This is not investment advice.
