Business intelligence firm MicroStrategy had acted in violation of Securities and Exchange Commission (SEC) accounting practices in its cryptocurrency purchases.
According to a report from Bloomberg, a letter of comment from the Securities and Exchange Commission (SEC) published Thursday showed that the regulator objected to MicroStrategy’s report on its purchases of ( ) based on non-GAAP accounting principles, or generally accepted accounting principles. The business intelligence firm reported that it used these methods to compute numbers for its BTC purchases excluding “the impact of equity-based compensation expense, impairment losses, and gains on the sale of intangible assets” — essentially negating some of the effects of cryptocurrency market volatility.
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Apparently, GAAP standards are not designed to report the value of cryptocurrencies. However, MicroStrategy had purchased 124,391 BTC as of December 30, which represents more than $4.7 billion in value through various purchases totaling about $3.8 billion since August 2020. The company stated that it used non-GAAP practices to exclude Cost “Accumulated impairment losses”. The value of his holdings at the market price of 1 BTC at 4:00 EST on the last day of each period.
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