Bitcoin critic Peter Schiff hosted a live audio session on X earlier today, in which he criticized Strategy’s preferred stock offering, STRC, calling it “an obvious Ponzi scheme” and challenging Michael Saylor and others to counter his claims.

The session lasted around two hours, during which Schiff thoroughly explained his views, expressing concerns that retail investors would ultimately be left empty-handed.

Why Schiff Believes the Mathematics Don’t Add Up

Schiff started the session with a clear illustration of a Ponzi scheme:

“A Ponzi, by definition, is when income paid out to existing investors comes from bringing in new investors, and then you take the money from the new investors and use it to make payments to the old investors.”

He claimed that Strategy lacks substantial income; while its software business does generate revenue, it is inadequate to fulfill the 11.5% annual dividends promised on STRC’s issuance. Thus, according to Schiff, as Strategy raises funds through new share issuance, it pays dividends to current stockholders from the proceeds, perpetuating a cycle that fits his definition of a Ponzi scheme.

“How does STRC make payments when the company itself doesn’t have any income?” Schiff asked. “The 11.5% yield on STRC is paid by selling more shares of STRC, and then you get money from the new investors to pay the old investors.”

Strategic has been aggressively acquiring Bitcoin. Recently, it invested $2.54 billion to purchase 34,164 BTC at an average price of $74,395, amassing a total of 815,061 BTC, which cost roughly $61.56 billion at an average price of $75,527.

STRC has served as the funding mechanism for these acquisitions, with the stock reaching a trading record of $1.1 billion in a single day on April 13, marking a significant increase over its prior averages.

The Risk of Total Loss

Schiff noted that there are no legal obligations for Strategy to continue paying dividends on STRC, as these payments are discretionary. Investors cannot enforce repayment or redeem their shares; selling is their sole option. Consequently, if Saylor halts payments, demand will plummet, leading to a collapse in the shares’ value.

In his words:

“It is an IOU for nothing.”

The current yield, which initiated at 9% upon STRC’s launch in July 2025 and raised to 11.5% in April, reflects the diminishing demand, prompting higher rates to attract new investors. Schiff remarked:

“They keep jacking it up as the supply of suckers dries up.”

A participant in the live session contended that Strategy’s market cap is lower than its BTC assets, suggesting it could liquidate holdings to cover all shareholders. Schiff refuted this, claiming that any attempt to sell would result in a significant price drop for Bitcoin.