Investors withdraw lawsuit against Strategy over Bitcoin accounting practices

A proposed class action lawsuit against Strategy which accused the business intelligence company and its executive chairman, Michael Saylor, of misleading investors about the risks of its substantial Bitcoin purchases, has been voluntarily dismissed by the plaintiffs, according to Bloomberg.

Summary

Investors have voluntarily dismissed a proposed class action against Strategy, closing claims the company misled shareholders over Bitcoin risks and accounting.
The lawsuit, filed in May, accused Michael Saylor and other executives of overstating Bitcoin gains and obscuring volatility and accounting impacts.

According to a Bloomberg report on August 29, investors voluntarily dismissed their proposed class action lawsuit against Strategy with prejudice, permanently closing the case.

The suit, originally filed in May by law firm Pomerantz LLP in the U.S. District Court for the Eastern District of Virginia, had named executives including Michael Saylor, CEO Phong Le, and CFO Andrew Kang as defendants.

Plaintiffs had argued that Strategy overstated potential gains from its Bitcoin strategy while downplaying volatility risks and failed to clearly disclose the effects of adopting new accounting standards for digital assets. The plaintiffs’ abrupt decision to withdraw all claims, filed just a day prior on August 28, offers no public explanation for their retreat.

Accounting shift and mounting criticism

Earlier this year, Strategy adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08, which governs the accounting for crypto assets. The shift to fair value accounting allowed the company to record its massive Bitcoin holdings at their market value each quarter, with unrealized gains and losses flowing directly into the net income statement.

Plaintiffs argued the company failed to fully disclose how this would affect its reported earnings, pointing to Strategy’s $4.22 billion net loss in the first quarter of 2025 as proof that the accounting

Go to Source to See Full Article
Author: Brian Danga

Did you like this?
Tip BTC Newswire with Cryptocurrency