In brief
- Five law firms filed identical class action lawsuits against Strategy alleging securities fraud over misleading Bitcoin investment statements.
- Two law professors told Decrypt that the firms are competing to become lead counsel in the potentially lucrative consolidated case, with selection based on plaintiff losses.
- Lawsuits stem from Strategy’s $6 billion unrealized Bitcoin losses after buying $7.7 billion worth of BTC in Q1, before the price dropped.
Bitcoin juggernaut Strategy is facing at least five copycat lawsuits accusing the company of securities fraud regarding its BTC treasury, but two law professors told Decrypt that the number of suits is not unusual.
Law firms look to head consolidated class action suits, a role that would enable them to boost their earnings from the case, they said. They often file separately in such cases until a judge names a lead plaintiff and combines the separate actions.
“Law firms jockey for position as lead counsel in securities class actions because the fees can be very lucrative,” said University of Michigan Law School professor Adam Pritchard—“tens of millions of dollars and occasionally more in the biggest cases.”
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Author: Stacy Elliott
