MicroStrategy Hit With Lawsuit Over $5.9B Bitcoin Loss – Still Adds $765M BTC

When it comes to Bitcoin, MicroStrategy (now rebranded as Strategy) has been diving headfirst, over and over again. No company has leaned harder into crypto than this one – making it one of the largest corporate Bitcoin holders. 

At the heart of it all is Michael Saylor. Come what may – praise or harsh criticism, Saylor doesn’t budge from his belief that Bitcoin is “digital gold”.

“My formula for success is rise early, work late, and buy Bitcoin,” 

But lately, that no-brakes approach is starting to raise more than just eyebrows.

A fresh lawsuit is now questioning whether the company’s obsession with Bitcoin might be more reckless than revolutionary. And just when you think they’d pull back, they double down with another massive BTC buy. 

What is going on?

Investors Push Back: Strategy Slapped With Class Action Lawsuit

MicroStrategy (MSTR) is staring down a class action lawsuit filed in the Eastern District of Virginia. The case, led by Pomerantz LLP, targets the firm and key executives for allegedly misleading investors over the financial impact of new Bitcoin accounting rules.

What is this all about? ASU 2023-08, a standard requiring companies to reflect Bitcoin’s market value on their balance sheets. According to the suit, Strategy failed to adequately warn investors of the potential $5.91 billion fair-value loss under the updated rules.

The complaint also accuses the company of sugarcoating reality through made-up metrics like “BTC Yield” and “BTC $ Gain,” painting a far rosier picture of profitability than GAAP numbers would support.

It didn’t go unnoticed. On April 7, after the $5.9B bombshell surfaced, MSTR stock dropped 8.67%. By May 1, earnings confirmed the dent – and investors weren’t amused. And that’s when things came crumbling down. 

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Meanwhile, Another Bitcoin Buy?

If you thought the lawsuit might slow Strategy down, think again.

According to a May 19 filing, the company has snapped up another 7,390 BTC – worth $764.9 million – at an average price of $103,498 per coin. The purchase was funded through an ATM equity offering and newly issued Series A STRK preferred stock.

That brings Strategy’s total stash to 576,230 BTC, now valued around $59 billion, with a new average cost basis of $69,726.

A Strategy Set in Stone

Here’s what’s odd: a high-stakes lawsuit, billions in reported losses, and yet – business as usual. There’s no sign of a pivot. No course correction. 

Love it or hate it, Strategy does not seem to be backing down. Will it be the key to their success or the first domino of their downfall? Time shall tell. 

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