MicroStrategy Files to Sell Up to $500 Million of Stock and Plans to Purchase More Bitcoin
One of the biggest institutional investors in bitcoin is MicroStrategy. Michael Saylor, the chairman of the software development firm, is a maximalist in Bitcoin and has sworn not to sell the company's Bitcoin holdings despite the significant drop in Bitcoin prices. Since hitting an all-time high in November of last year, Bitcoin has lost about two-thirds of its value.
MicroStrategy submits a $500 million stock offering.
MicroStrategy filed a document with the US Securities and Exchange Commission on Friday (SEC). MicroStrategy disclosed in the filing that it intends to sell up to $500 million worth of stock in order to fund its cryptocurrency acquisitions.
According to the document, MicroStrategy intends to utilize the proceeds from the stock offering for "general corporate activities, including the purchase of Bitcoin." The filing is encouraging news for the Bitcoin community because it shows MicroStrategy is still committed to its acquisition plan.
Saylor, who left his position as CEO a few months ago, is now MicroStrategy's executive chairman. The software company hasn't bought any fresh Bitcoin since leaving.
Since 2020, MicroStrategy has been buying a lot of Bitcoin to position itself as a crypto proxy. Since 2020, the business has been purchasing about 130,000 Bitcoin, worth over $2 billion, with money obtained from stock and bond issues.
Due to the company's significant Bitcoin holdings, changes in the price of Bitcoin are reflected in the stock's performance. Due to the poor performance of Bitcoin this year, MicroStrategy has lost $1.2 billion on its investment. The shares of MSTR have been impacted by the falling Bitcoin prices.
As Bitcoin recovered by about 10% on Friday, the shares increased by double digits. However, following the public disclosure of this stock offer, the after-trading hours display a 1.5% fall. The value of the current shares will likely decrease as a result of the stock offering.
The two top investment banking behemoths that deal with stocks related to cryptocurrencies, Cowen and BTIG, are leading the MicroStrategy stock offering.
MicroStrategy is being sued for tax fraud.
After being accused of tax fraud, Saylor and MicroStrategy also ended up on the wrong side of the law. Despite having lived in the region for more than ten years, Saylor is being sued in the District of Columbia for failing to pay income tax.
According to the Attorney General’s office, MicroStrategy is also being sued over its involvement in assisting Saylor to evade paying taxes. In a tweet announcing this action, Attorney General Karl A. Racine said that Saylor is legally obligated to pay hundreds of millions of dollars in taxes for money he received while he was a resident of Washington.
Additionally, according to the Attorney General's office, Saylor failed to pay the district nearly $25 million in taxes. Taxes and other payments, such as civil penalties, fees, and expenses, as well as damages, are all being sought for recovery by the office.
Racine claimed in a tweet that the action was the first to be brought in the district under the recently amended False Claims Act, which encourages whistleblowers to expose residents who violate tax rules.