MicroStrategy Class Action Lawsuit: 6 Frequently Asked Questions

The MicroStrategy class action lawsuit seeks to represent purchasers or acquirers of MicroStrategy Incorporated d/b/a Strategy (NASDAQ: MSTR; STRK; STRF) securities between April 30, 2024 and April 4, 2025, inclusive (the “Class Period”).  Captioned Hamza v. MicroStrategy Incorporated d/b/a Strategy, No. 25-cv-00861 (E.D. Va.), the MicroStrategy class action lawsuit charges MicroStrategy and certain of MicroStrategy’s top executives with violations of the Securities Exchange Act of 1934.

If you suffered substantial losses and wish to serve as lead plaintiff of the MicroStrategy class action lawsuit or just have general questions about you rights as a shareholder, please contact attorney Timothy L. Miles of the Law Offices of Timothy L. Miles, at no cost, by calling 855/846-6529 or via e-mail at tmiles@timmileslaw.com. Lead plaintiff motions for the MicroStrategy lawsuit must be filed with the court no later than July 15, 2025.

Read on for the six most frequently asked questions from investors about the MicroStrategy class action lawsuit.

1. What Are the 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 lawsuit alleges that on this news, the price of MicroStrategy stock fell nearly 9%.

2. Who is Affected by the MicroStrategy Class Action Lawsuit?

The MicroStrategy class action lawsuit primarily affects investors who purchased shares during the period in which the alleged misconduct occurred. If you invested in MicroStrategy. during this time, you could be part of the affected class and eligible for compensation if the lawsuit succeeds.

Identifying whether you are part of the affected group is crucial for understanding your rights and potential benefits. The lawsuit may involve a specific time frame and set of circumstances that define the class of investors who can participate. Knowing these details will help you determine your eligibility and take appropriate action.

In addition to investors, the MicroStrategy lawsuit can also impact the company’s executives, board members, and other stakeholders. The outcome of the lawsuit could influence MicroStrategy’s reputation, financial stability, and future operations, affecting all parties associated with the company. Staying informed about the lawsuit’s progress is essential for anyone connected to MicroStrategy.

3. What Is the Lead Plaintiff Process in the MicroStrategy Class Action Lawsuit?

The Private Securities Litigation Reform Act of 1995 allows investors who purchased MicroStrategy securities during the class period to seek appointment as lead plaintiff in the MicroStrategy lawsuit. The lead plaintiff plays a crucial role in representing the interests of the entire class.

Criteria for Lead Plaintiff

To be appointed as lead plaintiff, in the MicroStrategy lawsuit, an investor must meet specific criteria:

• Financial Interest: The investor must demonstrate that they have the largest financial stake in the outcome of the case.
• Typicality: The lead plaintiff’s claims must be typical of those of other class members.
• Adequacy: The lead plaintiff must be able to adequately represent the interests of the class.

4. What is the Private Securities Litigation Reform Act of 1995?

The Private Securities Litigation Reform Act (PSLRA) of 1995 is a significant piece of legislation in the United States that was enacted to curb frivolous or unwarranted securities lawsuits. This act aimed to enhance the efficiency and fairness of the securities litigation process by introducing several key provisions.

One primary aspect of the PSLRA was to implement more stringent pleading standards for plaintiffs, requiring them to provide specific evidence of fraud rather than relying on broad or generalized claims. Additionally, the PSLRA introduced a “safe harbor” provision for forward-looking statements, protecting companies from litigation if they made projections or forecasts in good faith and with appropriate cautionary language.

Moreover, the PSLRA sought to address concerns related to the costs and disruptions associated with securities lawsuits by limiting the ability of plaintiffs to file class-action lawsuits without substantial evidence. This provision ensures that companies are not unduly burdened by legal actions that lack merit.

An illustrative example of such litigation is the MicroStrategy lawsuit, where the company faced allegations of financial misstatements, leading to legal scrutiny under the provisions of the PSLRA. By establishing these reforms, the PSLRA has played a crucial role in balancing the rights of investors to seek redress while protecting companies from baseless legal challenges.

6. What Are the Eligibility Criteria for Lead Plaintiff Appointment in the MicroStrategy Class Action Lawsuit?

To be eligible for appointment as the lead plaintiff in the MicroStrategy lawsuit, an investor must meet the following criteria:

1. Securities Acquisition: The investor must have purchased or acquired MicroStrategy Incorporated d/b/a Strategy (NASDAQ: MSTR; STRK; STRF) securities between April 30, 2024 and April 4, 2025.

2. 

   Financial Losses: The investor must have suffered financial losses as a direct result of the alleged securities fraud perpetrated by MicroStrategy and its executives.

3. Typicality and Adequacy: The investor’s legal claims must be typical of those asserted on behalf of the class, and they must demonstrate their ability to adequately represent the interests of the entire class through experience, resources, and the absence of conflicts of interest.

It is crucial to note that both domestic and international investors who meet these criteria are eligible to seek appointment as the lead plaintiff in the class action lawsuit, as courts have consistently recognized the rights of non-U.S. investors in securities class actions.