Investors drop class action over Strategy’s Bitcoin accounting

Investors withdrew a high-profile class action against the Bitcoin heavyweight Strategy, concluding several months of legal tension for the company.

The lawsuit, filed in May 2025, had alleged that Strategy had deceived investors about its financial health and the effect of new accounting standards. Plaintiffs accused the firm of overstating the advantages of adopting a fair-value accounting standard that allowed the company to list its Bitcoin holdings on its books at its market price, which it adjusted quarterly.

The case has been a focal point for critics of Strategy’s unorthodox betting style, with some investors saying publicly that the firm’s public statements falsely indicated an overly optimistic picture of profitability and downplayed the risks tied to its volatile assets. The company had been sued for unspecified damages because it failed to adequately disclose the risks of the toxic assets and properly warn shareholders about the possibility of losses.

The decision to drop the suit represents a major legal victory for Strategy. The dismissal, which is filed with prejudice, prohibits those same claims from being filed again in court. For Strategy, which has staked its identity on its enormous bet on Bitcoin, the decision reflects its ability to hold to a business model that is mostly scorned but still a cause of pitched rhetorical division on Wall Street.

Strategy case withdrawn with prejudice, blocking any refiling

Previously, Bitcoin was valued only at its trade price. That meant Strategy would record losses when prices fell, but couldn’t recognize gains unless it sold its tokens. Supporters of the new accounting rule argued it offered a clearer snapshot of the company’s balance sheet, while critics said it painted an overly optimistic picture of profitability.

By the first quarter of 2025, just six months after Bitcoin’s bull rebound, shareholders were furious as Strategy reported a staggering $4.22 billion net loss. The results bear the dark side of fair-value accounting, where unrealized gains can quickly flip into massive paper losses.

The lawsuit also accused Strategy’s executives of engaging in “lucrative insider sales” of company stock while its value was “artificially inflated” before the accounting changes became public. In addition, the firm’s executives were accused of abusing their authority, gross mismanagement, and squandering corporate assets.

On Thursday, however, investors abruptly dropped the lawsuit. The dismissal was with prejudice, barring any refiling of the claims. Even Strategy’s own legal team was puzzled by the move. The outcome grants the company a reprieve as it contends with intensifying investor and regulatory scrutiny.

Strategy expands Bitcoin holdings to 632,457 BTC worth $70B

As recently reported by Cryptopolitan Strategy, disclosed on Monday, it had purchased an additional 3,081 BTC for $356.9 million. This was acquired at an average price of $115,829 per coin, according to a Form 8-K filing with the SEC. The acquisition boosts the company’s holdings to roughly 632,457 BTC, further solidifying its position as the largest corporate holder of Bitcoin.

Strategy now sits on about $70 billion worth of BTC at current prices, purchased at an average of $$73,527 per BTC for a total cost of roughly $46.50 billion, including fees. This leaves the Bitcoin treasury company with about $23.5 billion in unrealized gains.

The firm’s recent purchases were funded with proceeds from its at-the-market offering programs. From Aug. 18 to Aug. 24, the firm sold 875,301 MSTR shares under its Common ATM for about $309.9 million in net proceeds. Additionally, it offloaded 210,100 shares of its 8.00% Series A Perpetual Strike preferred (STRK) for $20.4 million. It also sold 237,336 shares of its 10.00% Series A Perpetual Strife preferred (STRF) for $26.6 million net, and 944 shares of its 10.00% Series A Perpetual Stride preferred (STRD) for $0.1 million.

Still, the Bitcoin treasury company accounting has emerged as an area of dispute. Fair-value standards enable Strategy to reflect Bitcoin’s minute-by-minute peaks and troughs in value. The firm is also exposed to wild price swings that can wreak havoc on quarterly earnings. That sharply distinguishes Strategy’s Bitcoin-backed wealth from its reported net income.

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