Key Takeaways
- Peter Schiff has called Strategy a fraud.
- Schiff challenged Strategy Chairman Michael Saylor to a debate on the issue.
- Critics have called Strategy a Ponzi scheme because it uses money from new investors to service debts.
As Strategy (MSTR) comes under pressure amid the latest crypto market downturn, Peter Schiff has called out founder Michael Saylor.
With both men scheduled to appear at Binance Blockchain Week in December, Schiff challenged Saylor to debate the charge that Strategy’s Bitcoin treasury model is a scam.
Peter Schiff Calls Out Strategy “Fraud”
In an X post on Sunday, Nov. 16, Schiff alleged that Strategy’s “entire business model is a fraud.”
“Regardless of what happens to Bitcoin, I believe MSTR will eventually go bankrupt,” he stated.
While Schiff is a well-known Bitcoin skeptic, debates over the viability of Saylor’s digital asset treasury model are widespread.
Critics point to the risks of a publicly traded company using debt and equity issuance to accumulate BTC.
Strategy’s growth model relies on the company constantly raising money to buy more Bitcoin.
More controversially, it also uses the new capital to repay debt from previous raises.
When BTC goes up, so does MSTR. Because its stock price keeps rising, investors have been happy to keep funding Saylor’s company.
MSTR Investment Risks
Schiff’s charges of fraud likely relate to Strategy’s reliance on new fundraising to pay existing investors.
On the surface, this does indeed look like a Ponzi scheme. However, Strategy is open about the risks involved.
Moreover, unlike newer entrants to the digital asset treasury space, having been accumulating Bitcoin for years, the firm benefits from a much lower average purchase price.
Speaking on an earnings call in August, Saylor claimed Strategy could survive an 80% BTC drawdown without missing a single dividend payment.
Despite these assurances, the market has priced in additional risk following recent bearishness.
On Nov. 13, Strategy’s market capitalization briefly fell below the value of its Bitcoin holdings, prompting concerns that the firm may be forced to sell some of its assets.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
