Genius Group Forced to Liquidate Bitcoin Holdings Amid Legal Battle

Genius Group, a Singapore-based education and technology company, has been compelled to liquidate its Bitcoin holdings following a court order in the United States. This decision stems from a legal dispute that has restricted the company from raising funds, issuing shares, or making further Bitcoin purchases. The court's ruling is part of a broader legal battle involving a collapsed agreement between Genius Group and Fatbrain AI, which led to fraud accusations from shareholders and an SEC investigation.

The American District Court for the Southern District of New York approved a preliminary injunction that halts Genius Group's ability to generate revenue through stock sales. This injunction, along with a Temporary Restraining Order (TRO), has blocked the company's access to investor funds and forced it to begin selling its Bitcoin holdings. The dispute originated from Genius Group's attempt to cancel a deal with Fatbrain AI, resulting in legal actions that have significantly impacted the company's financial operations.

According to the firm, the legal dispute has led to a Temporary Restraining Order (TRO) that prevents Genius Group from selling any shares, raising funds, or utilizing its $150 million ATM funding, specifically blocking the purchase of Bitcoin. This has resulted in a significant drop in the company's Bitcoin reserves, from 440 BTC to 430 BTC. The court's decision has also led to a 53% drop in Genius Group's share price, from $0.47 to $0.22, and its market capitalization is now 40% of the value of its Bitcoin Treasury.

Genius Group had previously implemented a Bitcoin-first strategy, allocating Bitcoin as its treasury reserve asset in November 2024. The company's Chief Executive Officer, Roger James Hamilton, has been a strong advocate for Bitcoin, positioning Genius Group as a Bitcoin-first company. The firm had approved a $33 million rights offering to buy BTC, but the court order may force it to change its approach to Bitcoin acquisition.

Other firms, such as MicroStrategy, Metaplanet, and Tesla, have also added Bitcoin to their balance sheets, viewing it as a hedge against inflation and economic uncertainty. MicroStrategy, in particular, has been aggressive in its Bitcoin acquisition campaign, recently acquiring 22,048 BTC for $1.92 billion at an average price of $86,969 per Bitcoin.

The legal case against Genius Group raises concerns for other companies holding Bitcoin. While firms like MicroStrategy continue to accumulate Bitcoin, Genius Group’s case highlights the legal risks involved. Many experts believe that as long as an organization adheres to the stipulated guidelines set by the authorities, there is nothing to fear regarding lawsuits. The current US SEC leadership has maintained a largely pro-crypto stance, which may provide some reassurance to companies investing in Bitcoin.