- Genius slashes Bitcoin reserves as U.S. court blocks crypto-linked fundraising.
- Legal freeze halts Genius Group’s stock sales and employee share payments.
- Fraud claims escalate in Genius-Fatbrain feud as SEC eyes key executives
Genius Group has been legally barred from purchasing Bitcoin or raising funds following a U.S. court ruling. The ongoing dispute stems from a halted merger with Fatbrain AI, now entangled in lawsuits alleging fraud and securities violations.
Court Ban Halts Bitcoin Accumulation and Share Activities
According to a post by Roger James Hamilton, the U.S. District Court for the Southern District of New York imposed a preliminary injunction. The ruling prohibits Genius Group from selling shares or using investor funds to buy Bitcoin, contradicting board-approved plans. The company claims this action forces it to reduce its Bitcoin holdings to fund ongoing operations.
Besides freezing access to its $150 million ATM facility, the injunction blocks share-based employee compensation. Genius Group asserts this restriction conflicts with Singapore law, where such agreements are legally binding. Hamilton described the legal order as detrimental to the company’s financial and operational integrity.
Genius Cites Alleged Fraud Tied to Fatbrain AI Executives
The court order follows arbitration attempts initiated by Genius Group in October to terminate its Asset Purchase Agreement with Fatbrain AI. The firm claims Fatbrain executives Michael Moe and Peter Ritz filed the injunction to extort further payments. In response, Genius submitted court evidence, including a February transcript, detailing alleged misuse of legal processes for personal gain.
Genius was voluntarily dismissed from shareholder lawsuits against Moe and Ritz, who face additional fraud claims from the SEC. The transcript has also surfaced in a derivative suit filed in Florida, escalating legal scrutiny against Fatbrain AI’s leadership. Meanwhile, Genius maintains its focus on Bitcoin despite ongoing legal restrictions.
Operational Cutbacks and Treasury Liquidation Underway
To mitigate the impact, Genius Group is actively restructuring and suspending expansion plans, including halting all event sponsorships and marketing campaigns. It has already reduced its Bitcoin reserves from 440 to 430 BTC, with additional sales likely if the injunction remains.
The firm is appealing the injunction through the Second Circuit Court while preserving its NYSE listing. Genius argues the court’s freeze endangers its survival as its market cap now sits below the value of its Bitcoin treasury.
