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Business intelligence firm MicroStrategy reportedly violated the SEC’s accounting practices for its cryptocurrency purchases.
According to Bloomberg, the SEC comment letter released on Thursday show Regulators object to MicroStrategy reporting its Bitcoin-related information (bitcoin) based on non-GAAP or GAAP purchases.The business intelligence firm has been Report It uses these methods to calculate its BTC purchase figures, excluding “the impact of stock-based compensation charges and impairment losses and gains from the sale of intangible assets” — essentially, negating some of the impact of crypto market volatility.
GAAP rules do not appear to be designed for reporting the value of cryptocurrencies.However, MicroStrategy has 124,391 BTC purchased as of December 30, since August 2020, several purchases have been valued at more than $4.7 billion, totaling approximately $3.8 billion. The company reports that it uses non-GAAP practices to exclude “accumulated impairment losses” from costs and is based on the value of its holdings of 1 BTC at 4:00 EST on the last day of each cycle.
MicroStrategy said that after buying BTC in July 2021, it “believes that these non-GAAP financial measures also help investors and analysts compare its performance across reporting periods on a consistent basis.” As reported by the SEC Say MicroStrategy should “remove this adjustment in a future document”.
related: MicroStrategy CEO Won’t Sell $5B of BTC Stash Despite Crypto Winter
The report came as shares of MicroStrategy fell more than 17.8% in the past 24 hours to a six-month low of $375.The drop could be influenced by BTC, also falling to six-month lows as Crypto assets fall Below $38,000.
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