Strategy, formerly known as MicroStrategy, secured a legal victory as a U.S. district court dismissed a securities class-action lawsuit alleging that the firm misled investors by failing to properly account for its bitcoin holdings. The complaint, filed in June 2025, claimed that Strategy applied generally accepted accounting principles (GAAP) inconsistently, overvaluing digital assets on its balance sheet and understating impairment losses.
At a hearing last week, U.S. District Judge Elena Kagan found that the plaintiffs did not establish material misrepresentations or omissions in Strategy’s SEC filings. The court noted that Strategy had fully disclosed its accounting policies, impairment testing procedures, and the fair-value hierarchy for digital asset valuation in the notes to its financial statements. Judge Kagan’s order emphasized that the claimants failed to demonstrate that any alleged misstatements would have altered the “total mix” of publicly available information.
Strategy had acquired over 150,000 bitcoins during 2024 and 2025 as part of its treasury strategy, funding the purchases through convertible debt and equity offerings. The firm’s aggressive accumulation of digital assets drew mixed reactions from investors and analysts, some of whom praised the approach and others who cautioned about the risk of concentration. The dismissed lawsuit argued that Strategy’s fair-value assessments did not reflect market volatility and thus misled shareholders about the stability of its asset valuations.
In its defense, Strategy submitted expert testimony from a Big Four accounting partner, who testified that impairment evaluations for crypto assets are consistent with industry practice and that fair-value measurements under Accounting Standards Codification Topic 820 (ASC 820) require companies to use quoted market prices when available. The court record shows that Strategy’s management engaged third-party valuation specialists to corroborate price inputs during quarter-end reporting periods.
Following the dismissal, Strategy’s shares rallied 8% in after-hours trading, reflecting relief among investors who had worried about potential financial and reputational damage arising from protracted litigation. CEO Michael Saylor issued a statement asserting that the ruling “reaffirms the company’s transparent accounting and robust disclosure practices.”
The dismissal also has broader implications for the digital asset industry. As crypto holdings become more prevalent on corporate balance sheets, policymakers and auditors are watching for consistent application of accounting standards. The Financial Accounting Standards Board continues to evaluate whether additional guidance specific to digital assets is warranted. In the interim, companies like Strategy that pioneer crypto treasury strategies are effectively testing the existing framework.
While the lawsuit’s dismissal does not preclude future challenges, the ruling sets a precedent that clear disclosure of accounting policies may shield firms from similar claims. Strategy’s victory underscores the importance of rigorous financial reporting and may embolden other public companies to consider strategic crypto allocations without fear of immediate legal reprisals over valuation methodology.
Comments (0)