Strategy class-action dismissal: plaintiffs voluntarily dismissed a lawsuit alleging the company misled investors about the impact of a new fair value accounting policy on profitability, ending the federal case with prejudice after Strategy—holder of over $68 billion in Bitcoin—reported a $4.22 billion Q1 2025 loss.
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Class-action dismissed with prejudice:
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Plaintiffs alleged misleading statements about fair value accounting and profitability.
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Strategy holds over $68 billion in BTC; Q1 2025 net loss reported at $4.22 billion.
Strategy class-action dismissal: plaintiffs end suit after accounting dispute over Bitcoin valuation; read the key facts and implications.
What was the class-action lawsuit about?
The class-action suit alleged Strategy misled investors about how a new fair value accounting practice would affect reported profitability. Plaintiffs claimed the company overstated benefits from marking Bitcoin to market rather than recording it at historical cost with impairment rules.
How did Strategy change its accounting for Bitcoin?
Strategy switched to a fair value accounting standard in 2025, allowing it to record quarter-to-quarter price swings of held Bitcoin on the balance sheet. Previously, the company recorded Bitcoin at purchase cost and could only recognize downward “impairment charges” without marking up gains unless assets were sold.
Why did shareholders react after the accounting change?
Shareholders grew concerned when Strategy reported a net loss of $4.22 billion in Q1 2025 despite a historic surge in Bitcoin prices earlier in the year. Critics argued that quarter-to-quarter mark-to-market volatility made profit comparisons with operating companies misleading.
When was the suit filed and how did it end?
The suit was filed in May 2025. On Thursday, plaintiffs filed a jointly stipulated dismissal in federal court in eastern Virginia, dismissing the claims with prejudice—meaning the same claims cannot be refiled in court.
What financial figures and company facts are relevant?
Strategy currently holds more than $68 billion in Bitcoin on its books. After adopting fair value accounting, the firm announced a $4.22 billion net loss for Q1 2025. The company originally pivoted from software development to a Bitcoin-accumulation strategy.
Frequently Asked Questions
Was any settlement announced in the dismissal?
Plaintiffs have not publicly confirmed a settlement. Outreach to plaintiffs’ attorneys seeking reasons for dismissal and any settlement details received no immediate public response.
How does fair value accounting affect reported profits?
Fair value accounting records market-driven gains and losses each reporting period, increasing volatility in reported earnings compared with historical-cost accounting, which recognizes declines through impairment but not unrealized gains.
How-to: How to assess companies that mark crypto to market
- Review official financial statements and SEC filings for accounting policies and notes.
- Compare reported net income with cash flow and recurring business revenues.
- Consider market volatility: mark-to-market gains may not reflect sustainable operating earnings.
- Analyze disclosures on impairment, reserve policies, and management commentary.
Key Takeaways
- Dismissal with prejudice: Plaintiffs voluntarily ended the lawsuit; claims cannot be refiled.
- Accounting change: Strategy’s move to fair value accounting increased reported volatility in profits.
- Financial context: Strategy holds over $68 billion in Bitcoin and reported a $4.22 billion net loss in Q1 2025.
Conclusion
The Strategy class-action dismissal resolves one legal challenge over the firm’s switch to fair value accounting for its large Bitcoin holdings. Investors should continue to weigh mark-to-market volatility against cash-flow metrics and official financial disclosures as the company adapts its reporting approach. COINOTAG will monitor filings and updates.
Published: 2025-06-05 | Updated: 2025-06-05 | Author: COINOTAG
