In short
- An investor in California accused strategy and his managers of making false and misleading statements about the profitability of his Bitcoin Treasury strategy.
- With reference to a decrease in the value of his Bitcoin Holdings, strategy revealed a loss of the first quarter of $ 4.2 billion earlier this year.
- Strategy, strategy has announced the scope of losses that could run a fair value accounting standard for Bitcoin, while promoting “rosy assessments” of the shift.
An investor established in California has accused the strategy, formerly Micro Strategy, and his managers of violating federal securities laws, by making false and misleading statements, according to a complaint submitted on Friday in the US court for the eastern district of Virginia.
In the 38-page document, Anas Hamza claimed that strategy and its managers, including co-founder and executive chairman Michael Saylor, could not reveal that “the expected profitability of the Bitcoin-oriented investment strategy of the company was too much.”
The complaint, which does not specify any damage, claimed that the company, which is based in Virginia, did not announce “the size of the losing strategy that could recognize the value of his digital assets after the approval of” Fair-Value accounting standards for Bitcoin, while the “Rosy assessment of the strategy reasons was called” reasons for the strategy reassesses was raid.
Hamza’s lawsuit, led by Pomerantz lawyers, also appointed strategy CEO Phong Le and Chief Financial Officer Andrew Kang as defendants.
In a Securities and Exchange Commission Department, Strategy said On Monday that it intends to ‘defend’ strongly against the claims of Hamza, adding that it could not ‘predict the outcome whether a reasonable estimate’ of the costs currently associated with the legal enterprise.
Strategy did not immediately respond to a request for comments from Decrypt.
Strategy started with saving Bitcoin under the leadership of Saylor in 2020, and it currently has around 576.00 Bitcoin worth $ 60.6 billion, based on current prices. In January it started to follow his Bitcoin companies at real value, with profit and losses reported as quarterly income.
Strategy warned At the beginning of April it did not anticipate a profitable first quarter, referring to a decrease of $ 5.91 billion in the value of his Bitcoin interests, on paper, during the three-month period. The company later made public A loss of the first quarter of $ 4.22 billion, or $ 16.49 per share.
According to another accounting model, which has classified the Bitcoin interests of the strategy as an intangible active, the company only had to recognize limitations if the price of the active fell. Only in the event that Strategy Bitcoin sold would the company ‘mark’ the value of its Bitcoin interests.
The decision of the strategy to emphasize consistently important performance indicators, including BTC yield-this follows in the ratio between Bitcoin Holdings of strategy and the outstanding ordinary stocks investigating that the company, and managers, have gone to a fair-value bookkeest to have gave a fair value book.
The Financial Accounting Standards Board, or FASB, approved for a fair value of digital assets in 2023. Strategy was one of companies that argue for the change, stating in a letter That it would “enable us to give investors a more relevant picture of our financial position and the economic value of our Bitcoin companies.”
Pomerantz did not immediately respond to a request for comments from Decrypt.
Published by James Rubin
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