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MicroStrategy sells off Bitcoin for the first time ever, before buying some more

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The largest corporate owner of Bitcoin reserves in the world, the American software business MicroStrategy, revealed on Wednesday that it traded some of its holdings for the first time ever on December 22.

However, the company and its renownedly optimistic co-founder Michael Saylor have not abandoned Bitcoin since MicroStrategy has since bought more BTC.

In a filing with the United States Securities and Exchange Commission (SEC), MicroStrategy said today that it sold 704 bitcoins (BTC) for about $11.8 million on December 22. Given how much the value of bitcoin has fallen since MicroStrategy first started buying it in 2020, this sale may have helped the company reduce its tax obligations.

According to the company,

MicroStrategy aims to carry back the capital losses resulting from this transaction against prior capital gains, to the extent such carrybacks are permissible under the applicable federal income tax regulations

This could result in a significant tax benefit.

On December 24, the company reversed course and bought 810 BTC for around $13.6 million. MicroStrategy has now added nearly 2,500 BTC to its overall tally since the beginning of last month, when combined with the additional 2,395 BTC that the business claimed it bought between November 1 and December 21 for a total of $42.8 million.

In light of the current Bitcoin price of roughly $16,735, the company’s total Bitcoin holdings come to nearly 132,500 BTC, which are currently valued at slightly over $2.2 billion, according to CoinGecko.

Although MicroStrategy still adds to its holdings in the most popular cryptocurrency, they are now significantly underwater. According to the company, it has invested over $4.03 billion in buying BTC so far, at a cost of $30,397 per coin.

Saylor co-founded MicroStrategy in 1989 and led the company as CEO until this past August. He is a well-known proponent of Bitcoin.

In order to focus even more on the company’s “Bitcoin acquisition strategy,” he resigned and assumed the position of executive chairman. In addition to his current position as president of MicroStrategy, Phong Le assumed the CEO position.

Tax allegations denied

Attorney General Karl Racine of Washington, D.C., declared in late August that he had brought civil lawsuits against MicroStrategy and Saylor for alleged tax evasion following Saylor’s change in position. Racine alleged that the business assisted the company’s founder in “eluding taxes he lawfully owes on hundreds of millions of dollars” earned while residing in Washington, D.C.

Saylor and MicroStrategy both denied the allegations, with the latter telling Decrypt that the accusations made by the attorney general “are incorrect, and we will defend fiercely against this overreach.”

The company announced its intention to sell up to $500 million of Class A company shares in September in order to finance additional Bitcoin purchases. MicroStrategy has sold around $46.4 million worth of shares as part of that endeavor to date, according to today’s SEC filing.

According to statistics from CoinGecko, MicroStrategy has a substantial amount more Bitcoin than any other publicly traded corporation. With little over 10,000 BTC, Bitcoin mining company Marathon Digital is the second-largest holding, while cryptocurrency exchange Coinbase is third with 9,000 BTC.

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