MicroStrategy Incorporated (NASDAQ: MSTR) is down 7.0% on Thursday after Michael Saylor – its current executive chairman was sued for tax fraud.
Details of the lawsuit
Karl Racine (Attorney General for the District of Columbia) accused Saylor in a lawsuit filed yesterday of living in D.C. but fraudulently claiming to be a resident of Florida to evade $25 million in taxes.
He also named MicroStrategy a defendant for “conspiring” to help its co-founder escape his tax obligations to the District of Columbia. Responding to the lawsuit, the cloud company said:
MicroStrategy was not responsible for Saylor’s day-to-day affairs and did not oversee his individual tax responsibilities. D.C.’s claims are false and we’ll defend aggressively against this overreach.
The lawsuit that arrives a month after Saylor stepped down as the chief executive of the Nasdaq-listed firm seeks to recover more than $100 million in unpaid taxes and fines.
What it means for Bitcoin?
“MSTR” is now down more than 60% versus the start of the year.
The stock market news is negatively affecting the price of Bitcoin as well on fears that Saylor/MicroStrategy may have to trim “BTC” holdings to deal with the penalty. But Marcus Sotiriou – Analyst at GlobalBlock says:
Whatever the outcome, I think investors are likely overreacting to this story and MicroStrategy will not end up having to trim their Bitcoin position. But if they do, this will lead to an appealing buying opportunity in my opinion.
In August, the Virginia-based company reported about a billion-dollar loss for its fiscal second quarter. Bitcoin is back below the $20,000 level on Thursday.