Microstrategy Class Action Lawsuit: MicroStrategy Investors File Major Class Action Suit, Shares Drop 12% [2025]

The news hit Microstrategy’s stock price hard. It dropped by $25.47 per share, or 8.67%, and closed at $268.14 per share on April 7, 2025. The lawsuit, “Hamza v. MicroStrategy Incorporated d/b/a Strategy,” was filed in the Eastern District of Virginia. It claims violations of federal securities laws under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Let’s get into the details of this most important legal challenge and what it means for investors who faced substantial losses during this period.

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 [email protected].

Investors File Class Action Over Bitcoin Losses

MicroStrategy faces a class action lawsuit filed in the United States District Court for the Eastern District of Virginia under the case caption “Hamza v. MicroStrategy Incorporated d/b/a Strategy” (No. 25-cv-00861). The Microstrategy Class Action Lawsuit charges the company and several top executives with violations of the Securities Exchange Act of 1934.

The lawsuit’s core allegations focus on MicroStrategy’s failure to properly inform shareholders about a predicted accounting standards change. This change would lead to multibillion-dollar unrealized losses tied to its Bitcoin holdings. Chairman Michael J. Saylor, CEO Phong Le, and CFO Andrew Kang are named as defendants in the Microstrategy Lawsuit .

Court documents reveal these executives made materially false and misleading statements about the company’s Bitcoin-focused investment strategy and treasury operations. The Microstrategy Class Action Lawsuit also claims they downplayed various risks linked to Bitcoin’s volatility and potential losses after adopting ASU 2023-08.

Investors who bought or acquired MicroStrategy securities between April 30, 2024, and April 4, 2025 (the designated “Class Period”) might qualify to join this legal action. July 15, 2025 marks the deadline for submitting lead plaintiff motions. The Microstrategy Class Action Lawsuit seeks remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.

MicroStrategy Reports $5.91B Loss After Accounting Shift

The Microstrategy Lawsuit centers around major financial changes triggered by new accounting rules. The company adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08 (ASU 2023-08) on January 1, 2025. This update completely changed how they report cryptocurrency holdings.

The changes hit hard and fast. MicroStrategy revealed an unrealized loss of $5.91 billion on its digital assets during the first quarter. This massive loss pointed to negative results for the entire quarter. A $1.69 billion income tax benefit helped offset some of these losses.

Companies used to treat cryptocurrency as an intangible asset. They had to record losses when prices dropped below purchase cost but couldn’t reverse these write-downs when prices bounced back. The new rules now require companies to measure crypto assets at fair value each reporting period. This means all price changes—up and down—show up directly on financial statements.

MicroStrategy warned about this risk in its SEC filing: “We may not be able to regain profitability in future periods, particularly if we incur significant unrealized losses related to our digital assets”. The market took this warning seriously, and the company’s stock dropped nearly 9% after this announcement.

The switch to fair value accounting needed a big adjustment right away. MicroStrategy had to add “a cumulative-effect net increase to the opening balance of retained earnings as of January 1, 2025, of $12.74 billion”. The market soon wiped out these paper gains.

The company now faces new tax challenges. Their new accounting method makes them vulnerable to a possible 15% tax on unrealized bitcoin gains under the Corporate Alternative Minimum Tax starting in 2026. This applies even if they don’t sell any coins.

Bitcoin’s price fell about 17.6% in early 2025. MicroStrategy’s huge holdings of 528,185 bitcoins—bought at an average price of $67,458—saw big value swings. These fluctuations created exactly the kind of financial uncertainty that worried investors.

Stock Price Drops 12% as Market Reacts to Disclosure

MicroStrategy faced severe financial consequences after disclosing a $5.91 billion unrealized loss on April 7, 2025. The company’s shares took a hard hit, falling $25.47 (8.7%) to $268.14 per share that day. Stock prices swung wildly between $252.60 and $297.60 during trading, showing how uncertain investors had become.

The aftermath was brutal. MicroStrategy’s market value dropped 12% as investors processed both the massive financial loss and warnings about future profits. This sharp decline wiped out months of gains, with the stock falling 8.85% year-to-date and 8.42% in April.

The ripple effects spread to other crypto-related stocks quickly. Bitcoin prices crashed over the weekend and lost its usual strength against growing trade tensions that had already shaken broader markets. Other companies felt the pain too – Robinhood tumbled 11% to $30.86, while GameStop, fresh from announcing its crypto investments, fell 4.6%.

The stock’s major pullback didn’t stop analysts from having mixed views. Their average price target of $510.38 suggested a possible 38% upside from current levels. All the same, predictions ranged widely from an optimistic $650.00 to a cautious $175.00, showing how divided opinions were about MicroStrategy’s Bitcoin-focused business approach.

The market grew more anxious when lawsuit allegations claimed MicroStrategy “failed to disclose material adverse facts about the Company’s business“. Of course, this made investors question whether the company had properly revealed the risks of its aggressive Bitcoin buying strategy, especially with new accounting rules in place.

Legal challenges, huge reported losses, and Bitcoin’s wild price swings created the perfect storm for MicroStrategy’s stock. Shareholders who invested during this period suffered substantial financial losses.

Conclusion: Implications for Crypto Investors and Corporate Strategy

MicroStrategy’s legal battle is a watershed moment for publicly traded companies with large cryptocurrency assets. The Microstrategy Class Action Lawsuit represents investors who bought securities during the specified period. Their main concern stems from the company’s massive $5.91 billion unrealized loss. This financial hit came directly from adopting ASU 2023-08, which changed how crypto holdings show up on balance sheets.

The disclosure led to a sharp 12% drop in stock value that wiped out months of gains almost overnight. The strongest evidence against MicroStrategy suggests that executives didn’t properly warn investors about the predicted accounting standards change and how it would affect financial statements.

The situation goes beyond this case and raises bigger questions about corporate transparency with volatile digital assets. Before this, companies could partially protect their financial statements from cryptocurrency price swings under the intangible asset model. However, fair value accounting now makes them face the full range of market volatility.

This Microstrategy Class Action Lawsuit serves as a warning sign for other corporations that see Bitcoin as a treasury reserve asset. Clearly, the outcome will shape how publicly traded companies tell shareholders about cryptocurrency risks. While Bitcoin supporters stay optimistic long-term, this case shows the real short-term risks of corporate crypto strategies, especially in market downturns.

Surely, MicroStrategy’s legal challenges will keep unfolding as both sides present their cases. The final decision could set important precedents for public companies’ communication about cryptocurrency risks and accounting implications to their investors.

Frequently Asked Questions About the MicroStrategy Lawsuit

Q1. What is the main reason for the MicroStrategy lawsuit ? The lawsuit was filed due to MicroStrategy’s disclosure of a $5.91 billion unrealized loss on its digital assets for the first quarter of 2025, following the adoption of new accounting standards.

Q2. How did MicroStrategy’s stock price react to the disclosure of the loss? MicroStrategy’s stock price fell sharply by $25.47 per share, or 8.67%, closing at $268.14 per share on April 7, 2025, resulting in a total drop of 12% in market value.

Q3. What accounting change led to MicroStrategy’s significant financial loss? The company adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08 (ASU 2023-08), which requires measuring crypto assets at fair value each reporting period, reflecting all price fluctuations directly on financial statements.

Q4. Who are the main defendants named in the MicroStrategy lawsuit? The MicroStrategy lawsuit specifically names Chairman Michael J. Saylor, CEO Phong Le, and CFO Andrew Kang as defendants, alleging they made materially false and misleading statements about the company’s Bitcoin-focused investment strategy.

Q5. What is the deadline for investors to join the class action lawsuit? Investors who purchased or acquired MicroStrategy securities between April 30, 2024, and April 4, 2025, have until July 15, 2025, to submit lead plaintiff motions to join the legal action.