FameEX Hot Topics | Strategy Faces Class Action Lawsuit Over Alleged Misleading Bitcoin Statements

In a May 19 filing with the U.S. Securities and Exchange Commission (SEC), Strategy revealed it is facing a class-action lawsuit in the U.S. District Court for the Eastern District of Virginia. The legal action alleges the company’s leadership misrepresented the nature of its Bitcoin investment strategy, failing to provide accurate disclosures about the associated risks and expected profitability.

Named in the lawsuit are several top Strategy executives, including Chairman Michael Saylor, President and CEO Phong Le, and Executive Vice President and CFO Andrew Kang. The plaintiffs accuse them of violating key provisions of the Securities Exchange Act of 1934—specifically Sections 10(b) and 20(a)—as well as Rule 10b-5. These rules are designed to prevent fraud and ensure transparency in public company disclosures.

According to the filing, the lawsuit claims that Strategy’s executives either made misleading statements or failed to disclose critical information about the company's Bitcoin-focused investment strategy and treasury management. It further alleges that the risks related to Bitcoin’s notorious volatility were not sufficiently communicated to investors, potentially leaving them vulnerable to significant losses.

However, not everyone agrees with the lawsuit’s premise. 0xngmi, a pseudonymous developer at decentralized finance analytics firm DefiLlama, criticized the case on social media. He argued that the company has been transparent about its high-risk profile, stating, “You’re buying a company that is self-labelled as ‘leverage on Bitcoin,’ what do you expect?” He maintained that Strategy did not understate the risk, but rather, the volatility was clear to anyone paying attention.

Despite the legal headwinds, Strategy’s bold Bitcoin treasury strategy has influenced other firms. Last week, shares of luxury watchmaker Top Win jumped over 60% in premarket trading after announcing its rebranding to AsiaStrategy and the adoption of a Bitcoin accumulation strategy. The company is partnering with Sora Ventures, which previously worked with Metaplanet—now a larger Bitcoin holder than el salvador. Similarly, a publicly traded catering firm in Bahrain with a $24.2 million market cap also embraced a Bitcoin strategy through a partnership with 10X Capital, signaling continued corporate interest in Bitcoin despite regulatory scrutiny.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.