Strategy, Facing class action lawsuit for allegations of Bitcoin profitability exaggeration
The famous New York law firm Pomerantz has filed a class action lawsuit against Bitcoin-holding company Strategy for alleged violations of federal securities law. According to The Block, the plaintiffs claim in a complaint filed in the Eastern District of Virginia that Strategy provided false information about its Bitcoin investment strategy and financial operations, misleading investors.
According to the lawsuit, Strategy promoted its Bitcoin-centric strategy as if it would generate high profitability, but in fact, it intentionally minimized or ignored the risks associated with BTC's severe price volatility. The plaintiffs claim that the materials or statements delivered to investors were composed in a biased manner, placing more weight on profitability than on Bitcoin's risks.
This lawsuit has drawn market attention as it was filed amidst Strategy's aggressive Bitcoin acquisition strategy, making it the largest BTC-holding listed company. The company's CEO, Michael Saylor, has recently emphasized that there is no change in the long-term holding strategy even as they announced additional purchases.
Meanwhile, as Pomerantz has a precedent for leading class actions against large tech and financial companies like Tesla and Robinhood, there is an expectation that this case could also be prolonged. Strategy has not yet released an official position regarding this lawsuit.