Genius Group, an AI-driven education company, announced it must sell its Bitcoin holdings after a U.S. court order blocked the company from selling shares, raising funds, or purchasing Bitcoin.
The U.S. District Court for the Southern District of New York issued a preliminary injunction on March 13, preventing Genius Group from accessing its $150 million at-the-market funding and continuing its Bitcoin-first strategy.
As a result, the company has reduced its Bitcoin (BTC) holdings from 440 to 430 Bitcoin to fund operations, according to a company note.
Multiple lawsuits
The legal battle stems from Genius Group’s attempt to terminate an Asset Purchase Agreement with Fatbrain AI, a deal that has become the focus of multiple lawsuits.
In October 2024, Genius Group initiated arbitration to exit the agreement. By December, both companies had agreed to a preliminary injunction related to the APA.
Fatbrain AI shareholders later filed lawsuits against the company and its executives, Michael Moe and Peter Ritz, alleging fraud in connection with the APA. The SEC also brought shareholder fraud allegations against Fatbrain AI, according to Genius Group.
In response, Moe and Ritz sought a Temporary Restraining Order and a preliminary injunction against Genius Group, which the court granted on February 14.
False statements
Genius Group claims the injunction was based on false statements and has filed motions to lift the restrictions. The company also submitted a transcript of a meeting with Ritz, alleging he detailed a strategy to use the court order to extract money from Genius Group.
Fatbrain AI shareholders have also filed this transcript in their lawsuit against Moe and Ritz in Florida, according to the note.
Genius Group CEO Roger James Hamilton said the company did not anticipate that a U.S. court could restrict its financial decisions.
“We never dreamed that it was possible that a U.S. court could block the company from being able to issue shares, raise funds or buy Bitcoin – all actions that would normally be decided by a public company’s shareholders or Board rather than a court,” Hamilton said.
The court order has forced Genius Group to restructure its operations, including downsizing, closing divisions, and halting sponsorships, marketing, and investments. The company has also been unable to issue share-based compensation to employees, which it says puts it in violation of Singaporean labor laws.
“We will not bend to fraudsters and market manipulators that are themselves the subject of multiple lawsuits for fraud and misconduct,” Hamilton said.
Since the restraining order, Genius Group’s share price has dropped 53%, and its market capitalization is now at 40% of its Bitcoin Treasury value. The company has filed an emergency motion with the U.S. Court of Appeals for the Second Circuit to overturn the injunction.
Genius Group adopted a Bitcoin-first strategy in November 2024, aiming to hold Bitcoin as its primary treasury reserve asset. Despite being forced to sell some holdings, the company reiterated its commitment to Bitcoin and its belief in its long-term value.
