Genius Group Temporarily Banned from Expanding Bitcoin Treasury Following US Court Order

Singapore-based artificial intelligence firm Genius Group says it's temporarily barred from expanding its Bitcoin treasury

Singapore-based artificial intelligence firm Genius Group (SGX:GNI) has been temporarily barred by a US court from expanding its Bitcoin treasury.

The New York District court on March 13 issued a preliminary injunction (PI) and temporary restraining order (TRO) in connection with a broader dispute surrounding Genius Group's merger with Fatbrain AI, which was announced in March 2024, the firm said on April 3.

After the merger agreement was completed, Genius Group in October initiated arbitration procedures to terminate the agreement, alleging fraud by Fatbrain AI executives.

Earlier in February, two Fatbrain AI executives, Michael Moe and Peter Ritz, applied for the TRO and permanent injunction, which will prevent Genius Group from selling its shares, using investor funds to buy more Bitcoin and from raising funds.

This ruling will stand until the pending arbitration between Genius Group and Fatbrain AI is completed.

The injunction has forced Genius Group to close some divisions, halt marketing activities and sell 10 Bitcoin (BTC) from its stash of 440, which is currently valued at over $23 million.

“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 PI remains in place,” the firm said.

Two shareholder lawsuits were filed in April 2024 against Fatbrain AI executives, including Moe and Ritz, and Genius Group for alleged violation of federal securities laws in connection with the merger, ASX law said in an October statement.

Two shareholder lawsuits against Fatbrain AI alleged that the company’s conduct during the merger was fraudulent, which defrauded shareholders of $30 million.

Genius Group was subsequently voluntarily dismissed from the suits on Feb. 14.

Genius Group claims it’s breaking Singapore law by following order

The US court injunction has also forced Genius Group to break Singapore law by halting share compensation to employees, which is 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 added that the firm will “continue to fly the flag for Bitcoin,” even when legally banned from building out its treasury.

Fatbrain AI didn’t immediately respond to Cointelegraph’s request for comment.

Genius Group first announced in November that it was taking 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%.

Genius Group's (SGX:GNI) share price is down 9.80% in the last trading session to $0.23, with a further 3.74% drop after the bell to $0.22, Google Finance data shows. The stock hit an all-time high of over $96 in June 2022 but has since lost over 99% of its value.