Bitcoin Juggernaut Strategy Faces Copycat Lawsuits Over Securities Fraud
Bitcoin juggernaut Strategy is currently embroiled in at least five copycat lawsuits accusing the company of securities fraud related to its BTC treasury. These lawsuits allege that Strategy, formerly known as MicroStrategy, misled investors about the anticipated profitability and risks of its Bitcoin buying, making “materially false and misleading” public statements over an 11-month period between April 30, 2024, and April 4, 2025.
The first class action suit was filed by Pomerantz LLP on May 16. However, instead of joining forces in the initial class action, identical lawsuits have been filed by other prominent law firms such as Gross Law Firm, Bronstein, Gewirtz & Grossman, Kessler Topaz Meltzer & Check, and Levi & Korsinsky.
According to legal experts, the competition among law firms to secure the lead counsel position in securities class actions is fierce due to the potentially lucrative fees involved. University of Michigan Law School professor Adam Pritchard noted that lead counsel fees in such cases can amount to “tens of millions of dollars and occasionally more in the biggest cases.”
Law firms strategically file identical suits in cases like this to position themselves as the most suitable firm to handle the case. Ann Lipton, a law professor at the University of Colorado, explained that the lead plaintiff plays a crucial role in controlling the litigation and selecting counsel for the class. As a result, multiple firms and plaintiffs file complaints to demonstrate their interest in leading the case.
Each of the five law firms involved in the lawsuits has been actively seeking additional plaintiffs through press releases, emphasizing the upcoming deadline for selecting a lead plaintiff on July 15. The lead plaintiff is typically chosen based on their volunteered assumption of the role and the magnitude of their losses, as dictated by the Private Securities Litigation Reform Act of 1995.
While it remains uncertain whether any of Strategy’s largest shareholders have aligned themselves with the competing class actions, notable institutional investors such as Vanguard Group, BlackRock, and Capital International Investors hold significant stakes in the company. Strategy’s BTC holdings, currently valued at over $63 billion, triggered the wave of lawsuits following the company’s warning of unrealized losses on its Bitcoin investments in April.
Despite the legal challenges, Strategy has reaffirmed its commitment to vigorously defend against the claims in its filings with the Securities and Exchange Commission (SEC). The company’s future profitability remains uncertain, particularly in light of the substantial unrealized losses on its digital assets reported in Q1.
As the legal battle unfolds, Strategy continues to navigate the complexities of the cryptocurrency market and defend its actions amidst mounting scrutiny from investors and regulators. The outcome of these lawsuits will undoubtedly have far-reaching implications for the company’s future operations and reputation in the evolving digital asset landscape.