Michael Saylor is facing heightened legal scrutiny as a shareholder rights firm has launched an investigation into Strategy, intensifying the pressure from a recent drop in stock prices and a Bitcoin selloff.
Summary
- The Rosen Law Firm has commenced an investigation into Strategy for possible securities claims, gearing up for a potential shareholder class action.
- Strategy shares have fallen below $100 and experienced a roughly 23% decline in the past week due to increasing market pressures from Bitcoin’s selloff.
- Both Peter Schiff and CryptoQuant have voiced concerns regarding Strategy’s Bitcoin strategy, liquidity issues, and capital allocation choices.
The Rosen Law Firm’s investigation aims to determine whether Strategy misled investors with significantly inaccurate business disclosures. They are exploring potential securities claims and preparing to represent shareholders who have experienced losses.
This announcement follows Peter Schiff’s statement indicating that investors holding the STRC preferred shares of Strategy might have grounds for legal action if they were misled by Saylor’s promotion of the company’s Bitcoin-backed investment strategy. Schiff made these comments prior to any law firm announcing plans to explore potential shareholder claims.
In the market, Strategy continues to face downward pressure. Data from Yahoo Finance shows that its shares fell below $100 earlier this week before dropping to approximately $86 on Thursday, resulting in a decline of over 6.5% for the day and around 23% for the past week.
Concerns Extend Beyond Share Prices
The legal challenges are being compounded by escalating criticism of Strategy’s Bitcoin treasury model. As reported by crypto.news, Schiff highlighted that sustained weakness in Strategy’s shares could necessitate difficult capital allocation decisions for the company.
Schiff pointed out that the ongoing selling pressure from short sellers might make buying back Strategy shares more attractive than acquiring more Bitcoin. He proposed that selling part of the company’s Bitcoin holdings to fund stock buybacks could help align Strategy’s market valuation with the true value of its assets, although he expressed skepticism about the potential to restore investor confidence.
Furthermore, Schiff warned that any sale of Bitcoin by Strategy could adversely affect the cryptocurrency market by increasing supply in a period of weak demand.
Concerns from CryptoQuant, an on-chain analytics firm, have also emerged. Their analysis suggested that Strategy should decelerate its Bitcoin accumulation and prioritize rebuilding liquidity instead.
CryptoQuant noted that the annualized dividend obligations linked to Strategy’s STRC perpetual preferred stock have surged to around $1.2 billion, while the company’s cash reserves have dipped by 38% in 2026.
The analysis also revealed that the coverage for dividends has decreased from over seven years to about 14 months. Restoring this coverage to 24 months would require roughly $2.8 billion in cash, nearly double the company’s current reserves.
Management Remains Committed to Bitcoin Strategy
Despite growing external criticism, Strategy’s management continues to support its long-term Bitcoin strategy. Saylor recently referenced circumstances from the 2022 crypto bear market when Bitcoin’s price was around $16,000 and the company’s debt exceeded the total value of its Bitcoin and cash reserves.
Saylor claimed that the company’s financial situation has significantly improved, with Bitcoin and cash reserves now surpassing liabilities by over $40 billion. His comments indicate that Strategy remains dedicated to its Bitcoin treasury strategy despite the current market volatility.
Additionally, the selling pressure intensified during Thursday’s trading session. Market commentator Zerohedge pointed out that unusual activity in put options for Strategy shares coincided with recent declines in both MSTR stock and Bitcoin.
Simultaneously, Bitcoin continued to drop following a report indicating that U.S. Personal Consumption Expenditures inflation increased to 4.1%, the highest rate since 2023, exerting further pressure on both the cryptocurrency and companies heavily invested in Bitcoin.
