Microstrategy Class Action Lawsuit: A Comprehensive and Authoritative Explication on the Pros and Cons of Opting Out of the Microstrategy Lawsuit [2025]

The MicroStrategy lawsuit centers on allegations of misleading investors through the provision of inaccurate or incomplete information regarding the company’s financial status and operations. Such allegations, if proven true, could result in significant legal and financial consequences for MicroStrategy. You need to grasp the magnitude of these claims and their potential impact on the company’s future.

Understanding the lawsuit requires analyzing the details of the allegations. Investors claim that MicroStrategy’s disclosures were not as transparent as they should have been, leading to financial losses once the truth was revealed. Legal experts are examining whether there was a deliberate attempt to mislead stakeholders, which could lead to punitive measures.

For anyone involved in investing, the MicroStrategy lawsuit serves as a stark reminder of the importance of due diligence and the risks associated with corporate investments. As you navigate through the nuances of this case, consider how transparency and accountability play pivotal roles in maintaining investor trust and confidence in the market.

Allegations in the MicroStrategy Class Action Lawsuit

Since 2020, MicroStrategy has increasingly focused on purchasing and holding bitcoin, a type of crypto-currency, as a long-term business strategy.  According to the complaint, on January 1, 2025, MicroStrategy adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), which requires publicly traded companies to measure their crypto assets at fair value in their financial statements, with gains and losses from changes in the fair value of those assets recognized in net income in each reporting period.

The MicroStrategy class action lawsuit alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that:

1. The anticipated profitability of MicroStrategy’s bitcoin-focused investment strategy and treasury operations was overstated; and
2. The various risks associated with bitcoin’s volatility and the magnitude of losses MicroStrategy could recognize on the value of its digital assets following its adoption of ASU 2023-08 were understated.

The MicroStrategy class action lawsuit further alleges that on April 7, 2025, MicroStrategy disclosed that, following its adoption of ASU 2023-08, it recognized a $5.91 billion unrealized loss on its digital assets for the first quarter of 2025, which was expected to result in a net loss for the quarter.

As a result, MicroStrategy warned investors that “[w]e may not be able to regain profitability in future periods, particularly if we incur significant unrealized losses related to our digital assets,” according to the complaint.

The MicroStrategy class action lawsuit alleges that on this news, the price of MicroStrategy stock fell nearly 9%.

Reasons Behind the MicroStrategy Class Action Lawsuit

The reasons behind the MicroStrategy class action lawsuit are rooted in allegations of corporate misconduct and misrepresentation. These claims suggest that MicroStrategy may have engaged in activities or made statements that misled investors about the company’s financial health or prospects. Understanding these allegations is vital for assessing the potential outcomes of the lawsuit.

The lawsuit’s foundation lies in the assertion that investors relied on inaccurate or misleading information when making investment decisions. Such claims, if proven, can have significant legal and financial implications for the company and its stakeholders. Investors need to understand the basis of these allegations to evaluate the potential risks and rewards associated with the lawsuit.

By comprehending the reasons behind the MicroStrategy lawsuit, you can better assess how it might affect your investments in MicroStrategy. Whether the claims involve financial statements, business practices, or other corporate actions, understanding the lawsuit’s basis will help you make informed decisions about your involvement and potential next steps.

What is the Lead Plaintiff Process Under the PSLRA?

The Lead Plaintiff Process under the Private Securities Litigation Reform Act of 1995 (PSLRA) is a critical mechanism in securities class action lawsuits, designed to ensure that the most capable and representative plaintiffs lead the litigation. The process begins when a securities class action is filed, often in response to alleged misconduct by a company, such as in cases like the MicroStrategy lawsuit. Upon filing, the court issues a notice to potential class members, inviting them to apply for the role of lead plaintiff. This notice is typically published in widely circulated financial newspapers or online platforms.

Interested parties must file a motion with the court expressing their desire to be appointed as lead plaintiff. The PSLRA mandates that the court select the lead plaintiff who has the largest financial interest in the case and who also meets the requirements of adequacy and typicality under Rule 23 of the Federal Rules of Civil Procedure. In determining financial interest, courts consider factors such as the amount of shares purchased, the net funds expended, and the approximate losses suffered.

Adequacy refers to the ability of the lead plaintiff to fairly and adequately protect the interests of the class members. Typicality means that the claims or defenses of the lead plaintiff are typical of those of the class.

For example, in the MicroStrategy lawsuit, potential lead plaintiffs would need to prove significant investment losses due to alleged fraudulent behavior by MicroStrategy.

Once appointed, the lead plaintiff assumes control over major decisions in the litigation process, including selecting and instructing counsel. This role is pivotal as it influences both legal strategy and potential settlement negotiations.

The lead plaintiff’s actions can significantly impact the outcome of securities class actions, ensuring that aggrieved investors receive fair representation and compensation for their losses.

Opting Out of a Securities Class Action

Opting out of a securities class action refers to the decision made by an investor to exclude themselves from participating in a class action lawsuit against a company in which they hold securities. This choice can be influenced by various factors, including the investor’s assessment of the potential recovery through individual litigation versus a class settlement, the specifics of their claims, and strategic considerations.

In a securities class action, investors collectively sue a corporation for alleged violations, such as misrepresentations or fraud that negatively impact the value of their investments. The MicroStrategy class action lawsuit is one example where investors might consider opting out.

Investors opting out of the MicroStrategy class action lawsuit might do so for several reasons. They may believe that their individual claims are stronger and more distinct than those of the class, potentially resulting in a higher recovery if pursued independently. Additionally, opting out allows investors to have more control over the litigation process, including decisions on legal strategy, settlement negotiations, and timing. This autonomy can be particularly appealing to institutional investors or those with significant holdings who have the resources to pursue individual lawsuits effectively.

However, opting out of a securities class action carries its own set of risks and challenges. Individual litigation often requires substantial time, effort, and financial resources. Legal fees can be considerable, and the burden of proof rests on the individual plaintiff to demonstrate the validity of their claims.

Moreover, while class actions benefit from collective power and shared costs, an investor opting out must bear these expenses alone. Therefore, this route is typically recommended for investors with substantial claims that justify the investment in individual litigation.

The decision to opt out should also be informed by a thorough understanding of the potential outcomes of both individual and class action lawsuits. Class actions often result in settlements that provide broad-based compensation to all affected parties, albeit sometimes at lower amounts per claimant due to the distribution across many plaintiffs.

Conversely, individual lawsuits may offer higher compensation but come with greater uncertainty and the possibility of protracted legal battles. Investors should weigh these considerations carefully when deciding whether to remain part of a class action or pursue independent litigation.

In summary, opting out of a securities class action such as the MicroStrategy class action lawsuit involves a strategic choice by an investor to pursue individual legal action rather than participating in collective litigation. While this option can provide greater control and potentially higher recovery for investors with substantial claims, it also entails significant risks and costs.

Investors must carefully evaluate their unique circumstances, resources, and legal strategies before making this decision. Consulting with legal professionals who specialize in securities litigation can provide valuable insights into whether opting out is the most advantageous course of action for their specific situation.

The Pros to Opting Out of a Securities Class Action

Securities class actions are lawsuits filed by investors who have suffered financial losses due to fraudulent activities or misrepresentation by a company. While participating in such actions may seem like a straightforward way to seek compensation, opting out of a securities class action can offer several distinct advantages. One prominent example is the MicroStrategy lawsuit, which illustrates the benefits of pursuing individual claims.

One significant advantage of opting out of a securities class action is the potential for higher recovery. In class actions, the settlement amount is typically divided among all plaintiffs, which can result in relatively modest individual payouts. By contrast, investors who opt out and file individual lawsuits may secure more substantial compensation tailored to their specific losses. The Broadmark lawsuit demonstrates how opting out allowed certain investors to negotiate settlements that more accurately reflected their unique circumstances and financial damages.

Another benefit of opting out is greater control over litigation strategy and decision-making. In a securities class action, the lead plaintiff and their attorneys make crucial decisions that impact all class members. Opting out enables investors to retain their own legal representation, ensuring that their interests are prioritized and their unique needs addressed.

For instance, in the MicroStrategy lawsuit,, those who opted out could work closely with their lawyers to develop personalized litigation strategies, which may have contributed to more favorable outcomes.

Opting out also allows investors to avoid the lengthy and often unpredictable process associated with class action lawsuits. Class actions can take years to resolve, with numerous procedural hurdles and delays along the way.

Investors who choose to pursue individual claims may expedite the resolution of their cases, potentially receiving compensation sooner. The MicroStrategy lawsuit, is a prime example of how opting out can streamline the legal process, enabling investors to achieve timely justice.

Moreover, opting out provides an opportunity for confidentiality and discretion that is not available in class actions. Class action settlements are typically public, which can expose investors to unwanted attention or scrutiny. Individual lawsuits can be settled privately, allowing investors to maintain anonymity while still securing compensation. In the case of the MicroStrategy lawsuit,, some investors may prefer the privacy afforded by opting out, avoiding public disclosure of sensitive financial information.

Lastly, individual lawsuits can sometimes address specific grievances or claims that class actions might overlook. Class actions are designed to address common issues affecting a large group of plaintiffs, which may not fully capture the nuances of each investor’s situation. Opting out allows investors to present detailed evidence and arguments related to their particular experiences and damages. The MicroStrategy lawsuit, highlighted how individual claims could surface unique aspects of fraud or misrepresentation that were not covered in the broader class action.

In conclusion, while securities class actions offer a collective avenue for seeking redress, opting out presents various advantages that may better serve individual investors’ interests. The MicroStrategy lawsuit, underscores the benefits of higher recovery potential, greater control over legal strategies, expedited resolution, confidentiality, and tailored grievance redressal. Investors should carefully weigh these pros when considering their options in securities litigation.

The Cons to Opting Out of a Securities Class Action

Opting out of a securities class action lawsuit often raises several consequential concerns for investors. One major drawback is the potential loss of collective power. In a class action, the claims of numerous investors are aggregated, which creates a stronger bargaining position against the defendant. By opting out, an individual investor forfeits the advantage of this collective strength and must pursue litigation independently, which can be both financially and strategically disadvantageous.

Furthermore, the legal costs associated with individual litigation can be prohibitively expensive. Class actions typically operate on a contingency fee basis, where attorneys are only paid if the case is successful. On the other hand, individual lawsuits require upfront legal fees and expenses, which may not be feasible for every investor.

Another significant con to opting out of a securities class action lawsuit is the risk of inconsistent or less favorable outcomes. In a class action, the settlement or judgment is distributed among all members of the class, ensuring that every investor receives compensation proportionate to their losses. However, when an investor opts out and pursues individual litigation, there is no guarantee that they will receive a more favorable outcome.

In fact, they may end up with a smaller recovery or even lose the case altogether. This inconsistency can lead to dissatisfaction and financial strain, especially if the investor’s resources are limited. The MicroStrategy class action lawsuit serves as a pertinent example where staying within the class could potentially yield more predictable and equitable results compared to going it alone.

Moreover, opting out of a securities class action lawsuit can lead to lengthy and complex legal battles. Class actions are generally more streamlined due to the collective nature of the claims and the shared legal representation.

Conversely, individual lawsuits necessitate separate discovery processes, pretrial motions, and potentially multiple court appearances, which can prolong the litigation process significantly.

This extended timeline can be stressful and demanding for an individual investor who may not have the time or expertise to navigate the intricacies of securities law. Additionally, pursuing an individual claim might require expert testimony and detailed financial analysis, further complicating the case and increasing costs.

Lastly, there is an element of uncertainty regarding settlement negotiations when opting out of a securities class action lawsuit. In a class action, settlements are typically negotiated by experienced attorneys who have a comprehensive understanding of the case and its merits. These attorneys often have established reputations and leverage that can facilitate favorable settlements.

On the other hand, an individual investor must rely on their own legal counsel to negotiate terms, which may not always result in a better deal. The MicroStrategy class action lawsuit illustrates this point well; staying in the class could ensure that investors benefit from expertly negotiated settlements rather than risking potentially inferior outcomes through independent litigation.

In conclusion, while opting out of a securities class action lawsuit might seem appealing to some investors seeking autonomy or potentially higher recoveries, it comes with significant risks and disadvantages. The potential loss of collective bargaining power, higher legal costs, inconsistent outcomes, prolonged litigation processes, and uncertain settlement negotiations all underscore the challenges faced by those who choose to go it alone.

Therefore, investors should carefully weigh these cons against any perceived benefits before deciding to opt out of such lawsuits.