Milk Road co-founder reveals why Strategy's STRC isn't the 'ponzi' Schiff claims

Peter Schiff spent overmuch of April 22nd and 23rd calling Strategy's STRC preferred banal a Ponzi, describing it arsenic "the astir evident Ponzi that has ever existed" and holding X spaces for radical to person him that it was not. He besides slammed the SEC for allowing Michael Saylor to beforehand the instrument.

The onslaught landed 3 days aft Michael Saylor's Strategy disclosed a $2.54 cardinal Bitcoin acquisition funded mostly by STRC proceeds, pushing the company's treasury past 815,000 BTC. That makes Strategy the largest firm Bitcoin holder connected earth, sitting connected astir $61.5 cardinal worthy of the plus astatine an mean outgo ground of astir $66,384 per coin.

In a caller interrogation with TheStreet Roundtable, Milk Road's co-founder, Kyle Reidhead, took the different side.

"I've enactment a batch of effort into trying to recognize what he's doing here," Reidhead said. "It doesn't travel without risk, but I don't deliberation it is this ticking clip weaponry that is gonna spell from 100 to zero overnight."

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STRC — abbreviated for Stretch — is Strategy's Variable Rate Series A Perpetual Preferred Stock. It is simply a hybrid information that pays a acceptable dividend similar a enslaved but sits connected the equilibrium expanse arsenic equity, giving Strategy flexibility that consecutive indebtedness does not.

It carries a stated magnitude and archetypal liquidation penchant of $100 per stock and presently pays an 11.5% yearly dividend, distributed monthly successful currency — moving retired to astir $0.96 per stock per month. Strategy archetypal priced STRC successful July 2025, and the dividend has been accrued 7 consecutive months earlier holding dependable astatine 11.5% for April, the archetypal period without an summation since inception.

The exemplary is straightforward: Strategy raises currency by issuing STRC shares done at-the-market offerings, past uses the proceeds to bargain much Bitcoin — without diluting communal banal shareholders.

STRC has 2 levers built into its design. If the terms climbs supra $100, Strategy issues much shares to propulsion it backmost toward par — and pockets much Bitcoin successful the process. If it slips beneath $100, Strategy raises the dividend to propulsion yield-seeking buyers backmost in. The institution has stated it intends to set the monthly dividend successful immoderate absorption it believes volition support the trading terms adjacent to that $100 stated amount.

There is simply a level connected however accelerated dividends tin fall. Strategy cannot trim the complaint by much than 25 ground points from the anterior month, and the complaint tin ne'er driblet beneath the one-month word SOFR rate.

"That's what they've done truthful far, and it's worked each azygous time," Reidhead explained.

The mathematics gets much absorbing if STRC falls. If shares merchantability disconnected to $70, that selling shrinks the outstanding stock count, which shrinks Strategy's full dividend obligation. A two-year currency runway, successful that scenario, stretches to 4 oregon 5 years due to the fact that the institution is paying dividends connected less shares.

A discounted terms besides changes the purchaser math. New investors are not conscionable getting the output — they are getting a imaginable superior summation backmost to par connected apical of it.

"STRC is astatine $70, I mightiness not attraction astir the 11.5% APY, but present I deliberation STRC tin spell backmost up to $100, and present I tin get 30% connected that, positive my 11.5% APY," Reidhead said.

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Schiff's halfway statement is that the operation is circular — Strategy relies connected caller capitalist wealth to support buying Bitcoin, which supports the banal price, which allows it to rise much money. He called the 11.5% output "financed by a axenic Ponzi scheme" and warned it collapses if caller buyers adust up.

The distinction, arsenic Reidhead sees it, is successful the math. Saylor does not request Bitcoin to spell parabolic for STRC to work. He needs it to admit astir 2% a twelvemonth — capable to work the dividend and support the mechanics turning.

"A batch would person to spell incorrect for this happening to wholly stroke up," helium said.

Most ineligible analysts person noted that Strategy openly discloses successful its SEC filings that dividends beryllium connected continued superior raises, which is simply a transparency that accepted Ponzi schemes by explanation lack.

Saylor has publically said helium wants to deed 1 cardinal Bitcoin earlier twelvemonth end. Strategy disclosed a $42 cardinal fundraising program to get there, divided evenly betwixt $21 cardinal successful communal banal and $21 cardinal successful STRC. With astir 185,000 BTC inactive to go, the institution would request to support a purchasing velocity of astir $540 cardinal per week done December.

STRC is the pipeline powering that pace. Reidhead is skeptical Strategy hits the header fig but thinks the velocity is the existent story.

"What the marketplace cares astir is, does helium support buying successful the billions each week?"

This communicative was primitively published by TheStreet connected Apr 25, 2026, wherever it archetypal appeared successful the MARKETS section. Add TheStreet arsenic a Preferred Source by clicking here.