 ▲ Michael Saylor, Bitcoin (BTC), Strategy / ChatGPT-generated image |
Strategy, a publicly listed company holding a large amount of Bitcoin (BTC), has sent shockwaves through the market as its newly introduced dividend policy faces criticism as a “dividend recycling” scheme and becomes embroiled in Ponzi scheme allegations.
According to cryptocurrency-focused outlet U.Today on March 2 (local time), Strategy, led by Michael Saylor, recently announced an unprecedented policy to pay dividends to shareholders using its Bitcoin holdings. However, market experts argue that the structure is fundamentally flawed, claiming the company is purchasing Bitcoin with funds raised through new share issuances or debt financing rather than genuine operating profits, and then distributing the resulting value as dividends.
Critics contend that Strategy’s approach resembles a classic Ponzi scheme. Instead of generating earnings from its core software business to fund dividends, the company is effectively rewarding existing shareholders through asset revaluations driven by rising Bitcoin prices or through additional capital raising. Concerns are mounting that if Bitcoin prices decline or access to further financing is cut off, the entire system could quickly collapse.
While Strategy’s board maintains that it seeks to maximize shareholder value by financializing Bitcoin rather than treating it as a simple asset, opposition has intensified. In particular, critics argue that pushing ahead with dividends despite ballooning debt—such as convertible bonds issued aggressively to purchase Bitcoin—amounts to reckless gambling by management. Investors have voiced concern over tying the company’s fate not to its intrinsic business value but to cryptocurrency volatility.
Financial authorities are also closely monitoring whether Strategy’s dividend policy could disrupt capital market order. Regulators are wary that setting a precedent in which a listed company distributes dividends based solely on asset price appreciation, regardless of operating performance, could spread speculative practices among other Bitcoin-holding firms. One market insider warned, “Strategy’s model lacks sustainability and resembles a sandcastle that would be the first to collapse in a Bitcoin downturn.”
The Ponzi scheme controversy surrounding Strategy starkly highlights the governance risks faced by publicly traded companies that center their management strategies on virtual assets. To restore shareholder and market trust, the company must prove the competitiveness of its core business rather than relying on Bitcoin-dependent dividends. The current controversy is likely to serve as a catalyst for tighter regulation of companies holding virtual assets going forward.
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