Strategy faces another class-action lawsuit? Who is the counterparty? Is MSTR selling coins to survive?

Author: Phyrex; Source: X, @PhyrexNi

Is Strategy facing another class action lawsuit? Who is Rosen Law Firm? Is MSTR selling Bitcoin to survive? Is a massive BTC crash imminent??

It seems like when it rains it pours for Strategy. Over the past two days, the most criticized parties for the Bitcoin drop are not Satoshi Nakamoto, but Michael Saylor and his MSTR, as well as its preferred stocks including STRC.

And that's not all; a law firm called Rosen Law Firm has also begun publicly soliciting a class action lawsuit against Strategy.

This news looks quite alarming. Rosen Law Firm's solicitation targets investors who have purchased MSTR, STRF, STRC, STRK, and STRD. The investigation focuses on whether Strategy and its management have made material misleading statements regarding the company's business, Bitcoin treasury strategy, profitability, and the risks of buying Bitcoin with leverage.

In plain English, the law firm is looking for people who bought Strategy-related securities and lost money, to see if they can organize a securities class action around Strategy's public disclosures, financing structure, Bitcoin strategy, and preferred stock risks.

But this must be clarified first: Rosen Law Firm's announcement soliciting investors does not mean Strategy has committed fraud, nor does it mean Michael Saylor has broken the law, and it certainly doesn't mean MSTR is about to sell Bitcoin to cover losses.

The operating model of U.S. securities litigation law firms is well-established. When a company's stock price drops, related securities fall, investors lose money, and market controversy rises, the law firm will issue an announcement, open a webpage, let losing investors fill out forms, collect transaction records and loss information, and then assess whether there is an opportunity to organize a formal lawsuit.

Rosen Law Firm is not some random workshop posting articles on the streets. The firm is very active in the field of U.S. securities class actions and has indeed achieved many settlement cases.

Rosen Law Firm has already initiated more than 30 securities class action investigations in 2026 alone. PennyMac, Barclays, Lucid, BitGo, ADMA Biologics, Sportradar, Coty, and now Strategy, are all cases handled by Rosen Law Firm.

But Rosen Law Firm is far from invincible.

U.S. securities class actions are inherently a high-filter-rate industry. Among the securities class actions resolved in the full year 2025, 155 were dismissed, 79 were settled, with the number of dismissals nearly double the number of settlements. More importantly, before a case officially survives a motion to dismiss, the probability of settlement is far lower than imagined. Only those that survive a motion to dismiss are more likely to move toward settlement later.

Rosen Law Firm itself has had cases dismissed by the court. For example, in the Axsome case, the court granted the defendant's motion to dismiss, and later only allowed the plaintiff to file an amended complaint. So, Rosen Law Firm's announcement only indicates that it has identified a potential claim opportunity; it does not mean Strategy is guilty, nor does it mean this case will certainly win.

PS: More interestingly, Rosen itself stated in this announcement about Strategy that past results do not guarantee similar results in the future.

Moreover, there is a very long gap from the announcement of a securities class action to an actual outcome. It typically takes three to five years. First, there needs to be a formal complaint, then a definition of the class period for investor losses, specific allegations of which statements by Strategy misled the market, which risks were inadequately disclosed, and whether a causal relationship can be established between the losses and those statements.

After that, there are steps like lead plaintiff appointment, motion to dismiss, discovery, and settlement negotiations. It is very common for the entire process to drag on for years. More importantly, a large number of U.S. securities class actions are ultimately dismissed; just because a law firm issues an announcement does not mean the company is necessarily at fault.

Therefore, the biggest short-term impact of the Rosen matter is on the sentiment and confidence of short-term investors.

The market is already worried about Bitcoin's decline, with MSTR's mNAV near or below 1, STRC falling below par value, rising financing costs for preferred shares, and declining efficiency of common stock ATMs. At this moment, Rosen Law Firm coming forward to solicit investors is like adding fuel to an already fragile market sentiment.

Not only fragile, but also weak.

I don't have much interest in price research, nor am I trying to force everyone to be bullish on Bitcoin. I just feel that FUD is of no help to the current market at all. Whether you are short or long, profiting by creating panic is somewhat unethical.

End.