AI-powered education group Genius Group has revealed that it is being compelled to sell off its Bitcoin reserves following a restriction imposed by the US District Court (Southern District of New York), which prevents the company from raising money, issuing stock, or investing investor funds in BTC.
Its chief exec now claims that court orders were based on fraud and are pushing the company into illegal territory.
Fraud Accusations, Legal Drama, and Bitcoin
In its official press release, the company explained the escalating legal challenges it faces due to a dispute involving Fatbrain AI (LZGI), its officers, and a controversial asset purchase agreement (APA).
The arbitration proceedings to terminate the APA began on October 30, 2024, after shareholder lawsuits and fraud allegations were made against LZGI executives Michael Moe and Peter Ritz. A preliminary injunction (PI) was agreed upon by both parties on December 17th of that year, which temporarily halted Genius’s share-related activities connected to the APA.
The situation intensified after the US Securities and Exchange Commission (SEC) filed shareholder fraud charges against Moe and Ritz. At their request, a Temporary Restraining Order (TRO) was granted on February 14, 2025. This prevented Genius from selling shares, raising funds, or even purchasing Bitcoin.
The Singapore-based firm claimed the TRO and subsequent PI granted by the US District Court for the Southern District of New York (SDNY) were based on false statements and intended to extort the company financially. In its defense, Genius submitted a recorded February 27 meeting transcript to the court, in which Ritz allegedly detailed how he exploited the legal process to pressure the company for further funds.
This transcript has also been presented by LZGI shareholders in a separate lawsuit filed in Florida, where Genius has since been dismissed as a defendant.
As the PI remains in effect, Genius asserted that it is legally barred from raising capital or utilizing its $150 million ATM funding facility, despite board and shareholder approval. This includes prohibitions on compensating employees through share issuances – an action the company argues violates Singapore law.
Genius has begun downsizing operations as a result of having no access to traditional funding. This has led to the halting of all marketing and sponsorship efforts. The company has even started liquidating a portion of its Bitcoin Treasury, reducing its holdings from 440 to 430 BTC to sustain operations.
On March 19, the company said that it filed an emergency motion with the US Court of Appeals for the Second Circuit to vacate the PI, pending the outcome of its appeal. Despite a 53% drop in its share price – from $0.47 to $0.22 – over the past six weeks, the company insists it remains committed to preserving its public listing and tackling what it describes as a coordinated scheme of financial manipulation.
It went on to warn that the ongoing court-imposed restrictions pose a serious threat to its operational viability but expressed confidence that its legal and strategic actions would help mitigate the risks.
Its CEO, Roger James Hamilton, said that the company “will not bend to fraudsters and market manipulators” who are themselves the subject of multiple lawsuits for fraud and misconduct. He promised that Genius would take all actions necessary and added,
“We will also continue to fly the flag for Bitcoin, even when legally banned from building our Bitcoin Treasury. We believe Bitcoin ensures transparency and prevents exactly the kind of wire fraud and shareholder fraud that are the subject of the current lawsuits.”
Genius Following Strategy’s Footsteps
As reported earlier, Genius first announced plans to allocate at least 90% of its current and future reserves to Bitcoin back in November last year.
The AI-driven education and business acceleration firm had then said that with its Bitcoin-first strategy, it hoped to be among the first NYSE American-listed companies to embrace Michael Saylor-led Strategy’s Bitcoin tactic fully.
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