A proposed class action lawsuit against MicroStrategy, which accused the business intelligence company and its executive chairman, Michael Saylor, of misleading investors about the risks of its substantial Bitcoin purchases, has been voluntarily dismissed by the plaintiffs, according to Bloomberg. This development comes as a significant update in the ongoing saga surrounding MicroStrategy’s Bitcoin investment strategy.
Background of the Lawsuit
The lawsuit, filed in May by law firm Pomerantz LLP in the U.S. District Court for the Eastern District of Virginia, had named executives including Michael Saylor, CEO Phong Le, and CFO Andrew Kang as defendants. Plaintiffs argued that MicroStrategy overstated potential gains from its Bitcoin strategy while downplaying volatility risks and failed to clearly disclose the effects of adopting new accounting standards for digital assets.
Accounting Shift and Criticisms
Earlier this year, MicroStrategy adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08, which governs the accounting for crypto assets. The shift to fair value accounting allowed the company to record its massive Bitcoin holdings at their market value each quarter, with unrealized gains and losses flowing directly into the net income statement. However, plaintiffs contended that the company failed to fully disclose how this would affect its reported earnings, pointing to MicroStrategy’s $4.22 billion net loss in the first quarter of 2025 as evidence that the accounting method was being presented to investors in a misleading light.
In addition to the lawsuit, MicroStrategy has faced scrutiny from other quarters. A prominent Wall Street advisor criticized the company for comparing its valuation metrics to tech giants like Apple and Nvidia, arguing that its recent performance was fueled by a one-time surge in Bitcoin rather than sustainable revenue growth. This rebuke underscored the growing skepticism from parts of the financial establishment about whether MicroStrategy’s unique model should be benchmarked against conventional corporate peers at all.
MicroStrategy’s Bitcoin Holdings and Performance
Despite the criticisms, MicroStrategy remains the largest corporate holder of Bitcoin, with 632,457 BTC on its balance sheet, worth about $68.32 billion according to BitcoinTreasuries.net. On August 25, Michael Saylor highlighted that the firm’s proprietary Bitcoin Yield metric had climbed to 25.4% year-to-date, framing it as evidence of long-term shareholder value tied to Bitcoin accumulation.
The voluntary dismissal of the lawsuit by the plaintiffs offers no public explanation for their decision. However, it marks a significant development in the ongoing narrative surrounding MicroStrategy’s approach to Bitcoin investment and accounting practices. For more information on this and other cryptocurrency news, visit Crypto.News.
Original source: https://crypto.news/investors-withdraw-lawsuit-against-strategy-over-bitcoin-accounting-practices/
