Genius Group's Bitcoin Plans Halted by U.S. Court Order

Genius Group, a Singapore-based AI firm, has encountered a significant setback in its plans to develop a Bitcoin reserve. A recent U.S. court order has prohibited the company from increasing its shares or using investor funds to purchase Bitcoin. This ban stems from a dispute over the merger with Fatbrain AI, which has led to a series of legal challenges for Genius Group.

The legal issues began when the New York District Court issued a preliminary injunction (PI) and temporary restraining order (TRO) on March 13. These orders halt Genius Group from selling shares, raising capital, and expanding its Bitcoin treasury, activities that the company had been heavily focused on. The dispute centers around the merger and purchase agreement between Genius Group and Fatbrain AI, which was completed in March 2024. However, Genius Group initiated arbitration proceedings to cancel the deal, accusing Fatbrain AI executives of fraud. In response, key figures at Fatbrain AI, Michael Moe and Peter Ritz, filed for the TRO and a permanent injunction in February to prevent Genius Group from moving money or stock around while the arbitration played out.

Before the legal battle, Genius Group had ambitious plans for its Bitcoin strategy. In November 2024, the company purchased 110 Bitcoin for $10 million and aimed to hold 90% or more of its reserves in Bitcoin, targeting a total of $120 million in BTC. This bold move even caused the company’s stock price to rise significantly. However, due to the injunction, Genius Group has had to shut down divisions, pause marketing, and sell 10 Bitcoin from its stash of 440. This sale helped keep operations going, but the company has warned that more Bitcoin sales may follow if the PI remains in place.

The court order not only affects Genius Group financially but also puts the company in a legally challenging position. According to CEO Roger James Hamilton, complying with the U.S. order has forced the company to violate Singapore law by freezing employee share compensation, which is part of their employment agreements. Hamilton expressed surprise and concern, stating, “We never dreamed that it was possible that a US court could block the company from being able to issue shares, raise funds, or buy Bitcoin.” Despite these restrictions, Hamilton remains committed to Bitcoin, adding that Genius Group will “continue to fly the flag for Bitcoin,” despite being legally restricted from building its treasury further.

Adding to the legal pressure, shareholders of Fatbrain AI filed two lawsuits in April 2024 against Moe, Ritz, and Genius Group itself. These suits accuse them of violating federal securities laws connected to the merger. With legal issues piling up, the company’s stock price has taken a hit, falling significantly from its peak of over $96 in June 2022. The court order has forced Genius Group to liquidate its Bitcoin holdings and halt all fundraising activities, significantly impacting its operational capabilities. The company is now facing operational downsizing and is forced to liquidate its Bitcoin holdings, creating a challenging environment as it navigates the constraints imposed by the court order while attempting to maintain its financial stability. The company's ability to raise funds and expand its Bitcoin treasury has been severely limited, forcing it to reassess its strategic plans and adapt to the new regulatory landscape.