Michael Saylor's Strategy, formerly MicroStrategy, doubled down on Bitcoin last week, purchasing 7390 coins for $765 million.

This was followed by a class-action lawsuit accusing executives of misleading investors about risks tied to its crypto-heavy strategy.

Recently, Strategy, formerly known as MicroStrategy, made headlines for two significant developments. The firm, renowned for its bold treasury strategy focused heavily on Bitcoin, announced the purchase of 7,390 coins last week. This acquisition, valued at $765 million, was part of a broader funding initiative that also saw Strategy sell shares and issue convertible preferred stock.

Recently, Strategy, formerly known as MicroStrategy, made headlines for two significant developments. The firm, renowned for its bold treasury strategy focused heavily on Bitcoin, announced the purchase of 7,390 coins last week. This acquisition, valued at $765 million, was part of a broader funding initiative that also saw Strategy sell shares and issue convertible preferred stock.

According to recent SEC filings, these funds were used to buy BTC on May 18 and 19 at an average price of $103,500.

According to recent SEC filings, these funds were used to buy BTC on May 18 and 19 at an average price of $103,500.

This purchase contributes to Strategy’s impressive cryptocurrency holdings, which now amount to 576,230 BTC, valued at over $59.2 billion. The company's year-to-date Bitcoin yield stands at 16.3%, reflecting gains from the cryptocurrency’s 20% monthly surge.

Moreover, Strategy's realised profit from its BTC investment is estimated at over $19.2 billion, considering an average buy price of $69,726 for its coins.

Earlier this month, Strategy executives hinted at the possibility of more crypto purchases. In response to a question about the company's hiring plans, Saylor stated that Strategy is actively seeking "strategic talent and acquisitions to expand our capabilities."

However, alongside this optimism, a class-action lawsuit was filed against Strategy executives, including Saylor, CEO Phong Le, and CFO Andrew Kang, on Friday. The suit, which was filed by plaintiff Anas Hamza and is being handled by the law firm Pomerantz LLP, claims that executives misled investors about the risks involved in Strategy's pivoting strategy.

The lawsuit, which was filed in Virginia federal court, asserts that Strategy executives failed to fully disclose the increased risks associated with Bitcoin investments following the introduction of new accounting rules for crypto assets in 2025. These rules, which were part of a broader overhaul of Generally Accepted Accounting Principles (GAAP), require companies to report their crypto assets at fair value and recognize any changes in value in net income.

The plaintiff's lawyer stated, "After Congress passed the new tax law in December 2024, which drastically altered the tax implications of holding crypto derivatives for more than 12 months, and as the macroeconomic outlook shifted in 2024, rendering Strategy's claims of Bitcoin serving as an inflation hedge false, the true volatility and liquidity risks associated with Strategy's crypto-heavy investment strategy became apparent."

The lawsuit further alleges that Strategy overstated the profitability of its Bitcoin strategy while attempting to conceal the potential for significant losses. It claims that executives made "false and misleading statements" about the company's financial condition and prospects, inducing investors into paying "artificial and inflated prices for Strategy's shares."

The complaint cites a 23% drop in Strategy’s stock price from a 52-week high of $843.74 on January 4. It is alleged that the stock price decline was triggered by a reported $1.2 billion unrealised loss on Strategy’s Bitcoin holdings in Q1 2024, which was disclosed on March 1.

The class-action suit seeks restitution for investors who purchased Strategy shares between February 2023 and March 2024. It aims to recover any unlawful gains reaped by the executives through their alleged actions.

In response to the lawsuit, a spokesperson for Strategy said, "The company has no knowledge of any wrongdoing by its executives and intends to vigorously defend itself against these claims."

Reactions to the lawsuit were swift and varied. One noted DeFiLlama developer, 0xngmi, expressed surprise at the suit, deeming it to be without merit. He pointed out that Strategy is open about its strategy, which involves leveraging on Bitcoin, and that investors were aware of the risks.

On X, 0xngmi wrote, "This is some next level buyers remorse. People knew exactly what they were investing in. It’s a company that’s making a huge bet on Bitcoin, and they’re very transparent about it."

However, short-sellers have been critical of Strategy’s treasury management strategy, which involves taking on debt to fund its Bitcoin buys, arguing that it could ultimately destabilise shareholders.

Despite the lawsuit, Strategy’s stock price rose by 8% in after-hours trading following the announcement of the new bitcoin purchase. This suggests that investors may still be optimistic about the company's long-term prospects.

"This lawsuit is a test of how regulators will view corporate crypto disclosures in an era of decentralized finance and rapid technological change," said analyst Clara Mertens. "It will also determine the level of protection afforded to investors who invest in companies with unconventional investment strategies."

As one of the most bullish institutional investors in Bitcoin, Strategy has been a subject of both praise and criticism for its cryptocurrency-heavy treasury strategy. The company began investing in