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Strategy Accused of Hiding Truth About Bitcoin Losses in Lawsuit
A lawsuit has been filed against Strategy, accusing the company of misleading investors about its Bitcoin treasury performance. This accusation stems from allegations that Strategy and certain officers concealed $5.9 billion in unrealized Bitcoin losses between April 2024 to April 2025.
According to the complaint submitted to the U.S. District Court for the Eastern District of Virginia, Strategy deliberately portrayed a rosy picture to investors during this period. The company allegedly minimized the impact of fair-value accounting, focusing on positive Bitcoin yields and gains while concealing the massive losses recorded in Q1 2025. These hidden losses would have significantly altered investor perception had they been transparently disclosed.
The suit claims that Strategy’s earlier optimistic forecasts lulled markets into underestimating Bitcoin’s volatility and overstating the company’s capacity to generate sustainable returns. Notably, the lawsuit names Michael Saylor, Strategy’s co-founder, alongside CEO Phong Le and CFO Andrew Kang as defendants, accusing them of perpetuating this overly positive narrative in earnings calls and public statements.
Strategy has vowed to “vigorously defend” the suit, asserting that it adhered to accounting rules and furnished all material information. The company has not provided earnings guidance for the disputed period beyond its SEC filings. On the other hand, the plaintiffs are urging other investors to join the case by July 15, which could lead to a landmark ruling influencing the disclosure of crypto assets and managing volatility in financial reporting.
A potential result of this lawsuit could be a precedent-setting ruling governing how publicly traded companies handle crypto asset disclosure and volatility management. This development may have significant implications for the overall cryptocurrency market.
For those following the Strategy saga closely, this development is expected to raise numerous questions about fair-value accounting, which was introduced as part of ASU 2023-08.
Source: crypto-economy.com
