Court Orders Genius Group to Liquidate Bitcoin Holdings
Genius Group, an education company powered by AI, has announced the necessity to liquidate its Bitcoin assets following a U.S. court ruling that restricts the company from selling shares, raising capital, or acquiring Bitcoin.
The U.S. District Court for the Southern District of New York issued a preliminary injunction on March 13, which halts Genius Group’s access to its $150 million at-the-market funding and its Bitcoin-focused strategy.
Consequently, the company has decreased its Bitcoin (BTC) holdings from 440 to 430 to support its operations, as stated in a company release.
Numerous legal disputes
This legal conflict originates from Genius Group’s effort to terminate an Asset Purchase Agreement with Fatbrain AI, a situation that has led to various lawsuits.
In October 2024, Genius Group commenced arbitration to withdraw from the agreement. By December, both parties had reached a preliminary injunction connected to the APA.
Fatbrain AI shareholders subsequently initiated lawsuits against Genius Group and its executives, Michael Moe and Peter Ritz, claiming fraud related to the APA. Furthermore, the SEC leveled fraud claims against Fatbrain AI shareholders, as reported by Genius Group.
In defense, Moe and Ritz sought a Temporary Restraining Order and a preliminary injunction against Genius Group, which the court approved on February 14.
Inaccurate claims
Genius Group contends that the injunction was founded on misleading statements and has submitted motions to lift the imposed restrictions. The company also provided a transcript of a meeting with Ritz, wherein he purportedly outlined a scheme to leverage the court order to extract funds from Genius Group.
Shareholders of Fatbrain AI have included this transcript in their litigation against Moe and Ritz in Florida, as per the company note.
Genius Group’s CEO Roger James Hamilton expressed surprise at the court’s ability to constrain the company’s financial choices.
“We never imagined it was even remotely possible for a U.S. court to prevent the company from issuing shares, raising funds, or purchasing Bitcoin – typically, these decisions would be determined by a public company’s shareholders or Board, not a court,” Hamilton stated.
The court’s order has compelled Genius Group to reconfigure its operations, which includes downsizing, shutting down divisions, and pausing sponsorships, marketing, and investments. Additionally, the company has been unable to provide share-based compensation to its employees, placing it at odds with Singaporean labor regulations.
“We will not yield to fraudsters and market manipulators who are themselves entangled in multiple lawsuits for fraud and misconduct,” Hamilton asserted.
Since the issuance of the restraining order, Genius Group’s stock price has plummeted by 53%, with its market capitalization now sitting at just 40% of its Bitcoin Treasury’s value. The company has filed an urgent motion with the U.S. Court of Appeals for the Second Circuit to overturn the injunction.
Genius Group implemented a Bitcoin-first strategy in November 2024, aiming to position Bitcoin as its main treasury reserve asset. Despite needing to liquidate some assets, the company reiterated its dedication to Bitcoin and its belief in its long-term potential.