MSTR share price continues to surge, shrugging off legal woes against MicroStrategy (now Strategy) after a New York law firm filed a lawsuit against the firm on Wednesday.
The class action highlights the broader scrutiny facing public firms that adopt crypto-heavy treasury models.
MicroStrategy’s MSTR Stock Defies Pressure from Legal Woes
MSTR stock price was trading at $407 pre-market on Thursday, extending Wednesday’s rally that saw the stock close 7.76% higher at $402.28.
The price surge comes despite New York law firm Pomerantz LLP filing a class action lawsuit accusing the company of misleading investors about the financial risks of its Bitcoin strategy.
The lawsuit in the Eastern District of Virginia alleges that Strategy (formerly MicroStrategy) violated federal securities laws.
Specifically, the firm cited “false and misleading statements” related to the profitability of its Bitcoin-focused treasury operations.
Pomerantz LLP’s complaint covers investors who purchased MSTR shares between April 30, 2024, and April 4, 2025. Investors have until July 15 to join the suit.
“…seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials,” read an excerpt in the press release.
The legal dispute centers on Strategy’s adoption of ASU 2023-08, a new Financial Accounting Standards Board (FASB) rule requiring fair value accounting for crypto assets.
“On January 1, 2025, the Company adopted ASU 2023-08 which requires that bitcoin holdings are remeasured at fair value with gains and losses from change in the fair value of bitcoin recognized in net income (loss) at each reporting period,” Strategy stated in a recent press release.
This update replaced the previous cost-less-impairment model. It requires companies to mark crypto holdings to market prices, including unrealized losses and gains.
Everything You Need To Know About the MicroStrategy Lawsuit
Pomerantz alleges that Strategy overstated the benefits of the new accounting standard and reportedly underplayed the risks, particularly during its Q1 2025 financial disclosures.
The complaint highlights a $5.9 billion unrealized loss on digital assets due to the accounting shift, which reportedly triggered an 8% drop in MSTR’s stock earlier this year.
“Defendants consistently provided rosy assessments of Strategy’s performance as a bitcoin treasury company following its adoption of ASU 2023-08. They did this, in part, by reporting and projecting positive BTC Yield, BTC Gain, and BTC $ Gain results, while omitting the immense losses the Company could realize,” read the statement.
Despite the legal overhang, investor confidence appears unshaken. Thursday’s pre-market performance reflects market optimism about Strategy’s long-term Bitcoin strategy, which began in 2020 under Executive Chairman Michael Saylor.
The company now holds 597,325 BTC, the largest corporate Bitcoin holder globally. Data on Google Finance shows that over the past five years, MSTR’s stock price has skyrocketed by over 3,300%.
Its bold bet on Bitcoin has inspired similar strategies from other public companies, seeing them outpace ETFs (exchange-traded funds) in Bitcoin accumulation for the third straight quarter.
With regulators tightening disclosure rules and accounting practices changing, the outcome of this case could shape the reporting of corporate crypto strategies in the future.
The post Strategy (MSTR) Stock Surges Past $407 Despite Bitcoin Disclosure Class Action appeared first on BeInCrypto.
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Lockridge Okoth
https://beincrypto.com/mstr-stock-class-action-bitcoin-disclosure/
2025-07-03 11:43:00
