Michael Saylor Crypto Lawsuits: DC Tax Fraud to Preferred Stock

Michael Saylor, co-founder and executive chairman of Strategy (formerly MicroStrategy), has been named in lawsuits on three fronts: a resolved District of Columbia tax fraud case that settled for $40 million in June 2024, a wave of federal securities suits filed in 2025 over the company’s Bitcoin-driven losses, and a 2026 shareholder challenge to changes in Strategy’s preferred stock. One of the securities class actions has been dismissed with prejudice; the derivative suit and the preferred stock case remain pending.

The DC Tax Fraud Case

The most fully resolved matter is the tax case brought by the District of Columbia under its False Claims Act. It began in April 2021 with a qui tam complaint filed by a whistleblower entity, Tributum LLC, a Wyoming limited liability company, alleging Saylor had lived in D.C. for years without paying District income taxes.¹ The Office of the Attorney General investigated, intervened, and in August 2022 then-Attorney General Karl Racine filed the government’s complaint against Saylor and MicroStrategy in D.C. Superior Court.²

Docketed as No. 2021 CA 001319 B and titled District of Columbia ex rel. Tributum LLC v. Michael J. Saylor and MicroStrategy, Inc., the case alleged Saylor evaded more than $25 million in D.C. income taxes between 2005 and 2020. The District sought treble damages and penalties exceeding $100 million.³

What the District Alleged

The central factual dispute was residency. The complaint said Saylor had lived since at least 2005 in a 7,000-square-foot Georgetown penthouse at 3030 K Street NW, formed by combining three condominium units into a residence he called “Trigate,” and that he docked yachts named Firefly and Moksha at the Georgetown waterfront. In 2014 he bought an additional penthouse in Adams Morgan.⁴

Saylor claimed to be a Florida resident. Starting in 2012 he bought a Miami Beach home, got a Florida driver’s license, and registered to vote in Miami-Dade County. The District called those steps “pretense” and “administrative actions,” noting Saylor never voted in person in Florida and cast only absentee ballots in 2016, 2018, and 2020.⁴ MicroStrategy, according to the complaint, kept internal spreadsheets tracking Saylor’s daily whereabouts from at least 2015 to 2020, showing he spent 313 days in the District in 2015 and 35 days in Florida.¹

The District also pointed to FAA flight records for the corporate jet and social media posts where Saylor called the Georgetown property his “home.” Attorney General Brian Schwalb, who took over the case from Racine and filed an expanded complaint in 2023, said Saylor “openly bragged about his tax-evasion scheme, encouraging his friends to follow his example, and contending that anyone who paid taxes to the District was stupid.”⁵

MicroStrategy was accused of helping. The AG alleged the company filed W-2 forms listing a Florida address, failed to withhold D.C. income taxes, and omitted accurate residency data from withholding filings.⁶ Around 2014, after being confronted by the company’s CFO about potential D.C. tax exposure, Saylor allegedly reduced his salary to $1 a year while continuing to receive high-value fringe benefits such as use of the corporate jet.³

The $40 Million Settlement

It was the first case brought under amended provisions of the D.C. False Claims Act that authorize the AG’s office to pursue tax fraud and allow whistleblowers to share in recoveries of up to 25 percent.⁶ On June 3, 2024, Saylor and MicroStrategy agreed to pay $40 million to resolve the suit, which the AG’s office described as the District’s largest income tax recovery.⁷ The settlement took the form of a consent order dismissing the case with prejudice.⁸ Saylor continued to deny the allegations, maintained Florida was his home, and said he settled to avoid the “burdens of the litigation.”⁵ Public records do not indicate how the $40 million was divided between Saylor and the company, or whether either party admitted wrongdoing.

The Securities Class Action Over Bitcoin Losses

A second front opened in 2025, tied to Strategy’s Bitcoin treasury and an accounting change. On January 1, 2025, the company adopted FASB rule ASU 2023-08, which requires cryptocurrency holdings to be reported at fair market value, including unrealized gains and losses, rather than at historical cost. When Bitcoin prices dropped in the first quarter of 2025, Strategy reported a $5.91 billion unrealized loss.⁹

On May 16, 2025, investor Anas Hamza filed a federal securities class action in the U.S. District Court for the Eastern District of Virginia, case No. 1:25-cv-00861, against Strategy, Saylor, CEO Phong Le, and CFO Andrew Kang. The complaint alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and covered investors who acquired Strategy securities between April 30, 2024, and April 4, 2025.¹⁰

The plaintiffs alleged the company marketed “rosy assessments” of its Bitcoin treasury while failing to disclose the potential for large unrealized losses once fair-value accounting took effect. The complaint said Strategy used metrics like “BTC Yield” and “BTC $ Gain” to obscure the risk from Bitcoin’s volatility and violated SEC Regulation S-K by failing to describe known trends that could materially affect financial results.¹⁰

In August 2025, Judge Anthony J. Trenga appointed Pomerantz LLP as lead counsel, with Cohen Milstein Sellers & Toll PLLC serving as liaison counsel.¹¹ The lead plaintiffs then filed a notice of voluntary dismissal, and on August 28, 2025, the Hamza action was dismissed with prejudice, meaning those specific claims cannot be refiled.¹² At least five similar securities suits were filed against Strategy around the same time, including actions involving Levi & Korsinsky and Kessler Topaz Meltzer & Check.⁹ In an SEC filing, Strategy said it would “vigorously defend against these claims” and could not predict the outcome or estimate potential losses.¹⁰

The Parmar Derivative Suit

Separately, investor Abhey Parmar filed a shareholder derivative complaint on June 19, 2025, in the Eastern District of Virginia. It names Saylor, Le, Kang, and four board directors as defendants, with MicroStrategy as a nominal defendant.¹³ The suit alleges breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment. It repeats much of the securities-fraud theory about misleading accounting disclosures and adds a claim that executives engaged in insider stock sales totaling nearly $31.5 million while the share price was allegedly inflated.¹⁴ Strategy has said it intends to defend against the claims.

The Preferred Stock Lawsuit

A newer suit arrived in June 2026, when a shareholder sued Saylor and Strategy’s board over changes to the company’s preferred stock. According to Bloomberg Law, the complaint alleges Strategy redefined the $100 liquidation preference of its “perpetual strike” preferred shares as a price floor, effectively raising the payout preference without a shareholder vote and pushing common stockholders further from recovery in an insolvency.¹⁵ The plaintiff’s identity, the court, and Strategy’s response were not publicly available at the time of reporting.

Why the Shareholder Cases Keep Coming

The shareholder litigation traces back to a balance sheet unlike any other public company’s. By mid-2026, Strategy held over 843,000 Bitcoin with a cost basis around $75,500 per coin, funded by more than $6.7 billion in convertible debt and preferred equity carrying roughly $1.7 billion in annual dividend obligations.¹⁶ S&P Global Ratings assigned the company a B- credit rating in October 2025, noting negative total adjusted capital and a legacy software business that generates insufficient cash flow to service its obligations.¹⁷ Strategy reported a $12.5 billion net loss in the first quarter of 2026 as Bitcoin declined.¹⁸

Plaintiffs in the securities and derivative cases argue Saylor and Strategy’s leadership understood how the new fair-value accounting standard would hit reported results, yet gave investors an optimistic picture while the share price was elevated. Strategy says the claims lack merit. The Hamza action is dismissed with prejudice, but the Parmar derivative case and the preferred stock suit remain live, and the company’s SEC filings acknowledge it cannot estimate its potential exposure.¹³

1
DC Office of the Attorney General. Tributum v. Saylor — DC FCA Complaint
2
Fox 5 DC. Tax Fraud Lawsuit Filed Against DC Billionaire Who Owes $25 Million, AG Says
3
CNBC. MicroStrategy Chairman Michael Saylor Accused of Tax Evasion by DC AG
4
DC Office of the Attorney General. Saylor FAC — Redacted Complaint
5
CNBC. Bitcoin Billionaire Michael Saylor Settles DC Tax Fraud Case for $40 Million
6
DC Office of the Attorney General. Attorney General Schwalb Secures $40 Million
7
Bloomberg Tax. MicroStrategy, Saylor to Pay $40 Million DC Tax Fraud Settlement
8
DC Office of the Attorney General. Consent Order — Tributum LLC v. Saylor
9
Yahoo Finance. Lawsuit Targets Michael Saylor, Strategy
10
The Block. Strategy and Co-Founder Michael Saylor Face Class Action Lawsuit
11
Law360. Pomerantz Tapped to Lead MicroStrategy Securities Suit
12
Yahoo Finance. Massive Relief: MicroStrategy Troubling Lawsuit Dismissed
13
U.S. SEC. Strategy SEC Filing — Parmar Derivative Action
14
TradingView. Saylor Hints Next Bitcoin Buy as Investor Sues Over Strategy’s Q1 Loss
15
Bloomberg Tax. Strategy, Billionaire Saylor Sued Over Preferred Stock Changes
16
The Motley Fool. Strategy Stock: Billionaire Michael Saylor Bitcoin
17
S&P Global Ratings. Strategy Inc. — Rating Details
18
CNBC. Strategy Breaks From Never Sell Bitcoin Approach