Why Are So Many Firms Suing Strategy Over Its Bitcoin Holdings?

Bitcoin juggernaut Strategy is facing at least five copycat lawsuits accusing the company of securities fraud regarding its BTC treasury, but two law professors told Decrypt that the number of suits is not unusual.

Law firms look to head consolidated class action suits, a role that would enable them to boost their earnings from the case, they said. They often file separately in such cases until a judge names a lead plaintiff and combines the separate actions.

“Law firms jockey for position as lead counsel in securities class actions because the fees can be very lucrative,” said University of Michigan Law School professor Adam Pritchard—“tens of millions of dollars and occasionally more in the biggest cases.”

Each suit accuses Strategy, formerly MicroStrategy, of misleading investors about the anticipated profitability and risks in its Bitcoin buying by making “materially false and misleading” public statements. They allege the fraud occurred over an 11-month period between April 30, 2024 and April 4, 2025.

The first class action was filed by Pomerantz LLP on May 16. But rather than join in the first class action, identical lawsuits have been filed by Gross Law Firm, Bronstein, Gewirtz & Grossman, Kessler Topaz Meltzer & Check, and Levi & Korsinsky.

None of the five law firms responded to repeated requests for comment from Decrypt.

“The position of lead plaintiff is valuable,” Ann Lipton, a law professor at the University of Colorado, told Decrypt. “The lead plaintiff controls the litigation and selects counsel, who will eventually be counsel for the class. So when a case looks strong, multiple firms and plaintiffs will file complaints to throw their hat in the ring.”

Lipton and Pritchard said that law firms file identical suits in cases like this to advertise themselves as the right firm to see the case through.

Lead plaintiff strategy

Each of the five firms has sent multiple press releases trying to attract more plaintiffs. Many of them prominently remind potential participants of the July 15 deadline for when a judge will choose a lead plaintiff. Once that happens, the rest of the plaintiffs will be consolidated under that plaintiff’s class action.

But law firms don’t just want a lot of plaintiffs; they want to secure the biggest investors possible, Pritchard explained. That’s because the Private Securities Litigation Reform Act of 1995 says that courts should award the lead plaintiff spot to someone who’s volunteered to assume that role and has the largest losses.

“The theory is that a plaintiff with more skin in the game will oversee the case and the lawyers,” Lipton said. “Institutions are favored, as well, because again they are more likely to provide necessary oversight.”

It’s not clear yet if any of MSTR’s largest holders have signed on to become plaintiffs in the competing class actions. As of an October SEC filing, Strategy co-founder and Executive Chairman Michael Saylor is still the single largest shareholder with 19,998,580 shares, worth almost $7.8 billion at the current MSTR price of $389.50.

But there are large institutions in the mix, including Vanguard Group with an 8.55% stake, BlackRock and Capital International Investors with 5.8% stake each, Susquehanna Securities with a 4.8% stake, and Jane Street Group with a 4.7% stake in the company.

The value of Strategy’s 592,345 BTC recently climbed above $63 billion, according to bitcointreasuries.net. The lawsuit frenzy kicked off after Strategy warned investors in April that it was unlikely to report a Q1 profit because of the nearly $6 billion in unrealized losses on its BTC holdings.

In an SEC filing, the company said it “may not be able to regain profitability in future periods, particularly if we incur significant unrealized losses related to our digital assets.” The company went on to report a $16.49 per common share decline in Q1.

In early April, the company’s 528,185 Bitcoin was worth approximately $41.3 billion. Strategy spent a whopping $7.7 billion buying BTC in Q1 at an average price of $95,000 per coin. But by the time the company needed to file its Q1 earnings report, the price of BTC had sunk to about $82,000 per coin. It has since rebounded to about $107,000, as of this writing.

The company did not immediately respond to a request for comment from Decrypt. But it has been acknowledging the lawsuits in 8-K filings with the SEC.

In each one it repeats: “We intend to vigorously defend against these claims. At this time, we cannot predict the outcome, or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.”

Edited by James Rubin