Genius Group Halted From Expanding Bitcoin Treasury After US Court Order

Genius Group, a Singapore-based artificial intelligence firm, has announced that it has been temporarily barred from expanding its Bitcoin treasury. This restriction comes after a US court order that prohibits the company from selling shares, raising funds, and using investor funds to purchase more Bitcoin. The preliminary injunction and temporary restraining order were issued by a New York District court on March 13, 2024, in connection with a broader dispute surrounding its merger with Fatbrain AI.

The merger and purchase agreement between Fatbrain AI and Genius Group was completed in March 2024. However, by October 30, Genius Group initiated arbitration procedures to terminate the agreement, alleging fraud by Fatbrain AI executives connected to the deal. In February, Fatbrain AI executives Michael Moe and Peter Ritz filed for the temporary restraining order and permanent injunction, blocking Genius Group from selling its shares, raising funds, and buying more Bitcoin pending the arbitration outcome.

The injunction has forced Genius Group to close divisions, halt marketing activities, and sell 10 Bitcoin from its stash of 440, worth over $23 million at current prices, to continue funding its operations. The firm hasn’t ruled out more sales in the future. “Genius is taking all necessary measures to minimize Bitcoin sales but anticipates that it will need to downsize its Bitcoin Treasury in the coming months in the event the preliminary injunction remains in place,” the firm said.

Fatbrain AI shareholders also filed two lawsuits against Fatbrain AI executives, including Moe and Ritz, and Genius Group, in April 2024, alleging violation of federal securities laws in connection with the merger. Two shareholder lawsuits against Fatbrain AI alleged conduct during the merger was fraudulent, which defrauded shareholders of $30 million. Genius Group was subsequently voluntarily dismissed from the suits on February 14, 2024.

Genius Group claims that the US court injunction has also forced it to break Singapore law by halting share compensation to employees as part of its employment agreements. “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 — all actions that would normally be decided by a public company's shareholders or Board rather than a court,” said Genius Group CEO Roger James Hamilton. He said the firm will “continue to fly the flag for Bitcoin,” even when legally banned from building out its treasury.

Genius Group first announced in November 2024 that it had taken the first steps to build a Bitcoin treasury by purchasing 110 Bitcoin for $10 million. The firm had earlier announced its overall goal of committing 90% or more of its current and future reserves to be held in Bitcoin, with an initial target of $120 million, which saw the stock price surge by 66%.