Pomerantz LLP Files Class Action Against MicroStrategy Over Alleged Bitcoin Investment Misrepresentation

New York-based law firm Pomerantz LLP has initiated a class action lawsuit against Michael Saylor's MicroStrategy (formerly Strategy), accusing the Bitcoin-centric company of providing misleading information to investors regarding its cryptocurrency investment strategy's profitability and associated risks.

Key allegations in the legal filing include:
1. Failure to adequately disclose the financial impact of adopting new fair value accounting standards (ASU 2023-08)
2. Overstating benefits while downplaying volatility risks of large-scale Bitcoin holdings
3. Resulting in $5.9 billion unrealized losses and subsequent 8% stock price decline in Q1 2025

The lawsuit, filed in Virginia's Eastern District Court, covers shareholders who acquired MicroStrategy stock between April 30, 2024, and April 4, 2025, with a July 15 deadline for joining the action.

Legal representatives argue that MicroStrategy's public communications painted an unrealistically positive financial picture without proper risk disclosure, particularly regarding the accounting shift from cost-less-impairment to quarterly mark-to-market valuation for its substantial Bitcoin holdings (currently 597,325 BTC).

The case follows recent criticism from financial experts, including short-seller Jim Chanos who dismissed MicroStrategy's business model as 'financial gibberish,' and VanEck's Matthew Sigel who warned about potential shareholder risks from aggressive Bitcoin accumulation strategies.

MicroStrategy, which transitioned to a Bitcoin-focused corporate strategy in 2020, has seen its stock surge over 3,300% in five years, inspiring similar approaches by other public companies like Metaplanet.