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Strategy Accused of Hiding Truth About Bitcoin Losses in Lawsuit
In a recent development, a group of Strategy shareholders has launched a class action suit accusing the company of hiding truth about its Bitcoin losses. The allegations stem from an unprecedented change in accounting practices that led to $5.9 billion in unrealized losses.
As per reports, Strategy has been under scrutiny since adopting fair-value accounting in 2023. This drastic shift in policy had significant implications for investors who were left reeling after the company’s share price plummeted by over 8% when the losses surfaced in an April SEC filing. The exact timing of these events can be dated from April 30, 2024, to April 4, 2025.
The plaintiffs, led by Pomerantz LLP, claim that Strategy and certain officers have violated federal securities laws by making “materially false and misleading” statements regarding the profitability and risk profile of their Bitcoin holdings. In essence, they argue that Strategy painted an overly optimistic picture of their financial situation.
Notably, Strategy has vowed to vigorously defend itself against these allegations. While the company did not provide earnings guidance for the disputed period beyond its SEC filings, it claims that it complied with accounting rules and disclosed all material information. The shareholders are now calling for lead plaintiff nominations by July 15, enabling other investors to join the case.
If successful, this lawsuit could establish new precedents for how public companies must account for crypto assets and manage volatility disclosures in their financial reporting.
Source: crypto-economy.com
