Bitcoin-focused Investment Firm Strategy Faces Multiple Class-Action Lawsuits Over Unrealized Bitcoin Losses
Bitcoin-focused investment firm Strategy, formerly known as MicroStrategy, is currently dealing with at least five separate class-action lawsuits regarding $6 billion in unrealized Bitcoin losses. These lawsuits allege that the company provided misleading information to investors about the risks and profitability associated with Bitcoin investments.
The first lawsuit was filed by Pomerantz LLP on May 16. Subsequently, four other law firms, including Gross Law Firm, Bronstein Gewirtz & Grossman, Kessler Topaz Meltzer & Check, and Levi & Korsinsky, have chosen to file individual lawsuits with similar claims rather than joining the initial lawsuit.
Legal experts note that it is not uncommon for law firms to compete for the lead counsel role in class-action securities litigation cases, as the lead counsel position can be financially rewarding, with fees potentially reaching into the tens of millions of dollars. Adam Pritchard, a professor at the University of Michigan Law School, emphasized this aspect of competition among law firms.
Each of the lawsuits alleges that Strategy made false and misleading statements about the profitability and risks associated with Bitcoin investments between April 30, 2024, and April 4, 2025.
Professor Ann Lipton from the University of Colorado School of Law highlighted the significance of the lead plaintiff position, stating that the lead plaintiff plays a crucial role in controlling the litigation and selecting the class attorneys. In cases where there is a strong likelihood of success, multiple law firms and plaintiffs may file lawsuits to increase their chances of being selected as the lead plaintiff.
Law firms are actively seeking additional investors to join the lawsuits by issuing public press releases. These announcements often emphasize the upcoming July 15 deadline, when the court will appoint a lead plaintiff and consolidate the various cases under that individual.
According to Pritchard, the primary objective of law firms is to represent the investor who has suffered the most significant losses. The Securities Private Litigation Reform Act of 1995 dictates that the lead plaintiff must be the investor who has experienced the most harm and is willing to take on the lead role in the litigation process.
Lipton further explained that investors with substantial losses are preferred as lead plaintiffs because they are more likely to closely monitor the case and the actions of the attorneys involved. Institutional investors are often favored for this role due to their ability to actively participate in the legal proceedings.
Disclaimer: This content is for informational purposes only and should not be considered as investment advice.