Class Action Against Strategy Over Bitcoin Accounting Practices Ends

TLDR

• Strategy investors dropped a lawsuit filed in June over alleged accounting fraud and mismanagement.
  A similar lawsuit from May accusing Strategy of misleading profit projections was dismissed earlier.
• Strategy holds over 638,000 Bitcoin valued at $72.5 billion as of September 2025.
• The firm’s bid to join the S&P 500 was denied despite meeting eligibility rules.

Court documents filed Wednesday reveal that shareholders Abhey Parmar and Zhenqiu Chen have dismissed their lawsuit against Strategy. Filed in June 2025, the case had alleged breaches of fiduciary duties, abuse of control, unjust enrichment, and gross mismanagement at the Bitcoin-focused firm.

The dismissal follows another class-action suit dropped in August, which had accused Strategy of misleading shareholders about the effects of new crypto accounting rules. That case was filed in May and contained claims similar to the one dismissed this week.

Legal experts say multiple firms often file similar lawsuits to compete for the lead plaintiff position in consolidated securities litigation.

Strategy’s Legal History and Market Shift

This is not the first time Strategy has faced legal scrutiny. In 2000, company executives, including co-founder Michael Saylor, settled with the SEC over inflated earnings claims. The company paid $11 million in penalties and disgorgement without admitting or denying the charges.

Since pivoting to a Bitcoin-centric business model in 2020, Strategy has attracted both investor interest and regulatory attention.

The company no longer focuses on software but instead accumulates Bitcoin as part of its corporate strategy. Its stock (MSTR) rose from $14 in August 2020 to $362 as of September 2025, marking a 2,160% increase.

Bitcoin Holdings and Market Exposure

Strategy is the largest corporate holder of Bitcoin globally, owning 638,460 BTC valued at $72.5 billion. By listing on Nasdaq, it gives investors indirect exposure to Bitcoin, effectively functioning as a crypto treasury.

Despite meeting the technical requirements for S&P 500 inclusion, Strategy was not added to the index. JPMorgan analysts noted this as a possible signal that index providers are cautious about including companies that mainly hold Bitcoin.

“Strategy was denied entry into the S&P 500 despite meeting technical requirements,” JPMorgan wrote in a report, suggesting that traditional finance is hesitating to fully accept crypto-heavy companies.

Regulatory Pressure and Funding Challenges

Reports indicate Nasdaq now requires shareholder approval before companies can issue new stock for crypto purchases. In response, Strategy has moved away from its previous no-dilution stance, signaling that it may issue shares to fund further Bitcoin acquisitions.

Additionally, JPMorgan analysts observed a drop in both equity and debt fundraising in the crypto treasury sector last quarter. This could reflect waning investor interest in firms that primarily hold Bitcoin rather than operate within the crypto ecosystem.

The bank noted that index providers might increasingly favor companies with active crypto operations, such as exchanges or mining firms, over those like Strategy that serve primarily as Bitcoin-holding vehicles.

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