Investors in the prominent Bitcoin treasury company Strategy Inc. have withdrawn a proposed class action lawsuit that accused the company and its executives of misleading shareholders about the risks tied to its Bitcoin-focused investment approach and a recent accounting rule change.
The Case Against Strategy
Bitcoinist has reported that plaintiffs led by Anas Hamza filed a class action suit in the US District Court for the Eastern District of Virginia, against Strategy Inc., co-founder Michael J. Saylor, Chief Executive Officer Phong Le, and Chief Financial Officer Andrew Kang as defendants.
The case filed by Pomerantz LLP claimed violations of federal securities laws, specifically Section 10(b) with Rule 10b-5 thereunder, and Section 20(a) of the Securities Exchange Act of 1934. In particular, the complaint claimed that Strategy downplayed the financial risks of its aggressive Bitcoin accumulation strategy while also failing to share proper information on the expected profitability of this crypto investment.
The lawsuit also argued that executives failed to adequately disclose the potential impact of adopting Accounting Standards Update (ASU) No. 2023-08, which requires companies to mark crypto assets at fair market value and report fluctuations directly in earnings.
Plaintiffs Voluntarily Dismiss Claims
Interestingly, in a Bloomberg Law report on Friday, the lead plaintiffs and a shareholder have now voluntarily dismissed their claims against Strategy Inc. and its executives in a joint agreement. Notably, the dismissal applies with prejudice to the named plaintiffs, i.e., meaning they cannot refile the s
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Author: Semilore Faleti
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