Class Action Suit Against MicroStrategy
In a significant legal move, the American law firm Pomerantz has initiated a class action suit against MicroStrategy (MSTR) along with several of its top executives. This legal action claims that during the period spanning from April 30, 2024, to April 4, 2025, MicroStrategy misrepresented critical information regarding its ‘Bitcoin Reserve Company’ strategy, which misled investors about the inherent risks involved.
Allegations of Misrepresentation
The firm’s switch to a new accounting framework, ASU 2023-08, allegedly caused it to underestimate the severe financial repercussions tied to Bitcoin’s notorious price fluctuations.
Financial Disclosure and Stock Impact
The situation escalated on April 7, 2025, when MicroStrategy revealed staggering unrealized losses of about $5.9 billion for the first quarter, linked directly to the drop in Bitcoin’s value. This disclosure triggered a sharp decline in the company’s stock, which plummeted by 8.67%, ultimately closing at $268.14 per share on the same day.
Legal Proceedings
The class action has been filed with the Eastern District of Virginia, registered under case number 25-cv-00861. The lawsuit seeks reparations for losses incurred by investors due to alleged violations of federal securities laws, specifically invoking Section 10(b) and 20(a) of the Securities Exchange Act of 1934, along with Rule 10b-5.
