Strategy and its co-founder Michael Saylor are being sued in a US class action over alleged false statements about the firm’s profitability and bitcoin risk disclosures.

The lawsuit, filed by investors covering April 2024 to April 2025, also names CEO Phong Le and CFO Andrew Kang as defendants.

Plaintiffs claim they suffered losses due to the company’s misleading statements and the resulting decline in stock value.

Strategy currently holds 576,230 BTC, worth over US$59 billion based on recent bitcoin prices.

The complaint alleges Strategy overstated its performance under new FASB crypto accounting rules, while the company says it plans to vigorously defend itself.

🔗 Source: The Block

🧠 Food for thought

1️⃣ Accounting rule changes create new volatility for corporate Bitcoin holders

The lawsuit highlights a critical transition period as companies adopt ASU 2023-08, which fundamentally changes how Bitcoin appears on financial statements.

This FASB standard, effective after December 15, 2024, requires companies to measure crypto assets at fair value with changes recognized directly in net income, replacing the previous cost-less-impairment approach that only recorded losses 1.

For Strategy, with its massive 576,230 Bitcoin holdings, this accounting change creates earnings volatility that didn’t exist under the previous standard, where price increases weren’t recognized until assets were sold.

The timing is particularly significant as Bitcoin experienced substantial price fluctuations in early 2025, reaching historic highs near $109,000 before correcting significantly 2.

These fair value accounting requirements create challenges for Bitcoin treasury companies. During bull markets, they report substantial paper gains, but during downturns, they must immediately recognize losses, potentially creating misleading impressions about operational performance.

2️⃣ Bitcoin’s evolving volatility profile reshapes corporate risk considerations

Bitcoin’s volatility has historically been three to four times higher than traditional equity indices, creating unique challenges for companies using it as a treasury asset 3.

While volatility has generally decreased as Bitcoin’s market cap has grown, it still experiences significant price movements that can substantially impact financial reporting under fair value accounting 3.