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Lawsuits Pile Up Against Strategy Over Bitcoin Losses, Legal Process Could Take Years
Strategy, a company formerly known as MicroStrategy, is facing a mounting number of lawsuits from various law firms accusing the firm of securities fraud. The accusations revolve around alleged misrepresentation and downplaying of risks associated with its Bitcoin investment strategy.
According to reports, at least seven law firms have filed suit against Strategy, citing instances where the company allegedly overstated potential profits and understated the risks involved in its investment decisions. These allegations are grounded on a recent 8-K SEC filing by Strategy, which disclosed an unrealized loss of $5.9 billion related to its digital assets.
This development comes just days after the firm announced it has acquired an additional $472 million worth of Bitcoin. The purchase, made despite the ongoing legal scrutiny, brings Strategy’s total BTC holdings to over 601,550 units.
Industry experts predict that the legal process may take years to resolve. This is due to the complexity and nature of these cases, which often involve lengthy investigations, numerous depositions, and extended settlements negotiations.
The lawsuits are likely a result of the company’s recent SEC filing, in which it reported an unrealized loss on its digital assets. The very same day, Strategy’s share price plummeted by 8.7%. In this filing, Strategy warned investors that it may not be able to regain profitability in future periods if significant losses related to its digital assets persist.
The law firms involved in these lawsuits 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.
The legal community is also weighing in on the matter. Legal experts suggest that these class-action lawsuits may not necessarily result in significant settlements or speedy trials, with some cases potentially dragging on for years.
This sentiment was echoed by crypto lawyer Tyler Yagman from The Ferraro Law Firm, who emphasized the challenges involved in such cases. According to Yagman, many class actions like these do not reach trial or yield large settlements, and may instead settle without litigation.
The legal experts’ statements suggest that Strategy’s Bitcoin investment strategy is under intense scrutiny, which has led to a heightened demand for transparency from crypto treasury firms like Strategy. As the company prepares to release its Q2 earnings report on July 31, investors are likely to be eager to see how these recent developments have impacted the firm’s financials.
In related news, analysts forecast an EPS of -0.10 for the upcoming earnings report, which would represent a significant decline from the previous quarter where Strategy posted an EPS of -16.53.
Source: coinchapter.com
