Michael Saylor’s Strategy, formerly MicroStrategy, doubled down on Bitcoin last week, purchasing 7,390 coins for $765 million. This was followed by a class-action lawsuit accusing executives of misleading investors about risks tied to its crypto-heavy strategy. The dual developments spotlight rising tensions between corporate crypto adoption and regulatory scrutiny. Bitcoin’s price hovered above $102,600 during the acquisition, pushing Strategy’s total holdings to 576,230 BTC worth over $59.2 billion. Despite market optimism, legal challenges now threaten to overshadow the firm’s aggressive treasury strategy.
$764.9 Million Bitcoin Purchase
Strategy bought 7,390 Bitcoin between May 18 and 19, paying an average of $103,500 per coin. Funding came from share sales and convertible preferred stock offerings, according to SEC filings. The purchase boosted its year-to-date Bitcoin yield to 16.3%, reflecting gains from the cryptocurrency’s 20% monthly surge. With 576,230 BTC acquired at $69,726 each, Strategy’s unrealised profits exceed $19.2 billion. CEO Michael Saylor hinted at the move days earlier, tweeting cryptically about “strategic acquisitions” to his 3.4 million X followers.
Lawsuit Alleges “Misleading”
On May 19, a class-action lawsuit hit Strategy’s leadership, including Saylor, CEO Phong Le, and CFO Andrew Kang. Filed in Virginia federal court, the suit claims executives violated securities laws by downplaying Bitcoin’s volatility risks after adopting new crypto accounting rules. Plaintiff Anas Hamza, represented by Pomerantz LLP, argues Strategy overstated its Bitcoin strategy’s profitability while hiding potential losses. The complaint cites a stock price drop following a reported $1.2 billion unrealised loss in Q1 2024. Executives deny wrongdoing, pledging to “vigorously defend” the claims.
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Critics Dismiss Lawsuit
Reactions split quickly. Pseudonymous DeFiLlama developer 0xngmi called the suit baseless, noting Strategy transparently brands itself as “leverage on Bitcoin.” On X, he wrote, “Investors knew the risks; this is buyers’ remorse.” Short-sellers, however, warn Strategy’s debt-fuelled Bitcoin buys could destabilise shareholders. Meanwhile, the firm’s stock rebounded 8% post-announcement, suggesting investor confidence remains intact. “This lawsuit tests how regulators view corporate crypto disclosures,” said analyst Clara Mertens.
Global Competitors
Despite legal headwinds, Strategy’s blueprint spreads. Last week, Hong Kong’s Top Win surged 60% premarket after rebranding as AsiaStrategy and adopting Bitcoin. Partnering with Sora Ventures, it aims to replicate Japan’s Metaplanet, which now holds more BTC than El Salvador. Bahrain’s $24 million-market-cap catering firm also joined the trend, teaming with 10X Capital to launch a Bitcoin treasury. “Corporations see Bitcoin as both a hedge and growth engine,” said 10X founder Oliver Lee. “Strategy paved the way.”
What’s Next for Strategy and Crypto Markets?
Strategy plans to accelerate Bitcoin acquisitions, targeting a “notable portion” of the total supply by 2026. However, the lawsuit could prompt stricter disclosure rules for corporate crypto investments. Bitcoin’s price stability remains critical. A dip below $70,000 would erase Strategy’s unrealised gains, pressuring its stock. Furthermore, retail investors on X debate whether the firm is a “visionary” or “reckless gambler.”
Written By Fazal Ul Vahab C H
