Strategy Accused of Hiding Bitcoin Risks
Date: 2025-05-20 Author: Henry Casey Categories: BUSINESS
Strategy is at the center of a class action lawsuit after a class action lawsuit was filed against it on May 19. The company is accused of misrepresenting the expected returns of its Bitcoin investment strategy and deliberately concealing potential risks associated with the asset’s volatility.
The lawsuit names Chairman Michael Saylor, CEO Phong Le, and CFO Andrew Kang. The plaintiffs allege that the company’s actions violated securities laws. Prosecutor Anas Hamza said the lawsuit was filed on behalf of a group of investors who purchased Strategy shares between April 30, 2024, and April 4, 2025.
In response to the allegations, the company stated that it would vigorously defend its position and defend its rights in court.
Strategy currently holds 576,230 bitcoins, with a total investment of $40.2 billion, which corresponds to an average purchase price of $69,726 per coin. With the current market value of bitcoin at $102,615, the company's unrealized profit is more than $19.2 billion.
The crypto enthusiast community responded to the lawsuit with criticism. DeFi Llama founder, known under the pseudonym 0xngmi, expressed bewilderment at the charges, emphasizing that Strategy had been clear from the outset about its role as a leveraged vehicle for investing in bitcoin. According to him, the risks were obvious: "What else would you expect from a company whose entire model is based on bitcoin?" Interestingly, just one day before the lawsuit was filed, Strategy purchased another 7,390 BTC worth $764.9 million. The average price of the transaction was $103,500 per coin, which is higher than the current market value.
Despite the high income from cryptocurrency investments, Strategy's financial results for the first quarter remain mixed. Although the profit from bitcoin operations amounted to $5.8 billion, the company's total loss for this period exceeded $4 billion, which highlights the complexity and riskiness of the chosen strategy.
