Peter Schiff Slams STRC: This Is an “Obvious Ponzi Scheme”

Recently, well-known Bitcoin critic Peter Schiff blasted Strategy’s preferred stock STRC in a live broadcast, and did not hold back in calling it an “obvious Ponzi scheme.” Not only that, he also publicly invited Michael Saylor and others to step forward and refute him.

During the livestream, he spent nearly two hours laying out his views in detail, and explained why he believes this product will ultimately leave retail investors with nothing.

Schiff pointed out that the model works by using money from new investors to pay the returns of old investors. He also noted that Strategy has almost no meaningful revenue, and the money its software business earns is nowhere near enough to cover STRC’s 11.5% dividend each year.

He believes STRC’s operating model is to issue new shares to raise funds to pay dividends to existing shareholders, then issue new shares again—repeat the cycle endlessly. He questioned, “If the company has no income, then what does it use to pay? An 11.5% return rate is nothing more than maintaining dividend payments by selling more STRC shares.”

It is worth noting that Strategy has been channeling large amounts of capital into buying Bitcoin. Just last week, the company splurged $2.54 billion to purchase 34,164 BTC, allowing its total Bitcoin holdings to successfully surpass 815,000 coins.

And only on April 13, STRC’s single-day trading volume surged to $1.1 billion—more than four times the 300-day average trading volume (about $274 million). This shows that STRC serves as a key capital “engine” in Strategy’s fund circulation.

Schiff pointed out that Strategy has no legal obligation to pay STRC dividends; whether and how dividends are paid is entirely up to the company. Holders cannot force the company to pay back, nor can they redeem shares. They can only sell on the secondary market.

And once Saylor stops paying interest, the yield on STRC will disappear, demand will collapse, and the stock price will ultimately be reduced to zero. Therefore, Schiff concluded that this is an “IOU.”

Not only that—the trend of the yield itself also exposes the issue. When STRC was launched last July, it was 9%, and it was raised multiple times afterward, reaching 11.5% since April. Schiff believes this shows that market demand is weak, so the company can only keep raising the price to attract new buyers.

But some people push back, saying that Strategy itself holds a large amount of Bitcoin, and selling it could repay all shareholders’ returns. Schiff responded with disdain: “By the time they actually start selling, the price of Bitcoin would have already collapsed.”

#STRC