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MSTR.US
id: 1599
MicroStrategy ($MSTR) Bitcoin Losses and Misleading Valuation Metrics Case
Investors can submit applications for the lead plaintiff role.
E.D. Virginia
Court1:25-cv-00861
Case number04/30/2024
Class period Start04/04/2025
Class period End07/15/2025
Lead Plaintiff motion deadline- $MSTR investors filed a claim against MicroStrategy for overstating the profitability of its Bitcoin strategy and downplaying the risks of new accounting rules.
- After disclosing a $5.91 billion unrealized loss on its Bitcoin holdings, $MSTR dropped 8.67% on April 7, 2025.
Case Details:
MicroStrategy, which rebranded itself as a “Bitcoin Treasury Company,” spent years buying large amounts of Bitcoin to hold as a core corporate strategy. In 2024, the company began using new custom performance metrics—such as BTC Yield and BTC $ Gain—to convince investors that its crypto-focused approach was generating value.
On January 1, 2025, MicroStrategy adopted a new accounting rule (ASU 2023-08), which required it to report the full fair value of its Bitcoin holdings in each quarter. Unlike its prior method, this rule made the company recognize both gains and losses—even if the assets weren’t sold.
Despite claiming the new rule would increase transparency, MicroStrategy failed to warn investors that the change could expose them to large losses. Executives continued to promote the Bitcoin strategy using custom metrics while omitting the full risks of volatility and valuation swings.
On April 7, 2025, MicroStrategy revealed it had taken a $5.91 billion unrealized loss due to Bitcoin’s price drop that quarter. The company warned it might not return to profitability in the near future.
Following this, $MSTR dropped 8.67% that day.
Based on these events, $MSTR investors filed a claim against MicroStrategy, accusing the company of the following:
- It exaggerated the success of their Bitcoin-focused treasury strategy using custom metrics.
- It failed to warn investors about how new accounting rules would expose massive unrealized losses.
Considering all the representations, investors believe MicroStrategy misled the market about the financial risks tied to its crypto holdings and accounting changes.
Case Status
Lead Plaintiff Submission
Alleged Offence
Misleading Statements,
Omissions
Suspected Party
Directors,
Management
Security Type
Stocks
Trade Direction
Long
Shock Event Date
04/07/2025
Filing date
05/16/2025
Lead Plaintiff Deadline
07/15/2025