Genius Group, an AI-powered education company, is being forced to liquidate its Bitcoin reserves due to a restraining order imposed by the US District Court for the Southern District of New York. This order prohibits the company from raising capital, issuing stock, or utilizing investor funds for Bitcoin investments.
Chief Executive Roger James Hamilton claims the court’s decisions were rooted in fraudulent accusations, pushing the company dangerously close to illegal activity.
Fraud Accusations, Legal Drama, and Bitcoin
In an official press release, Genius Group detailed the increasing legal challenges it faces stemming from a dispute involving Fatbrain AI (LZGI), its executives, and a disputed asset purchase agreement (APA).
The arbitration process aimed at terminating the APA commenced on October 30, 2024, following lawsuits and fraud allegations against LZGI executives Michael Moe and Peter Ritz. A preliminary injunction (PI) was mutually agreed upon on December 17 to temporarily suspend Genius’s share-related activities linked to the APA.
The situation escalated when the US Securities and Exchange Commission (SEC) filed fraud charges against Moe and Ritz. On February 14, 2025, at their request, a Temporary Restraining Order (TRO) was issued to prevent Genius from selling shares, raising capital, or purchasing Bitcoin.
Genius contends that the TRO and subsequent PI were built upon misleading statements with an intention to financially extort the company. In defense, Genius submitted a recent meeting transcript where Ritz allegedly admitted to manipulating legal procedures for financial gain.
This transcript was also utilized in a separate lawsuit filed in Florida against LZGI executives, resulting in Genius being dismissed as a defendant.
As the PI remains active, Genius asserts that it is legally stifled from raising funds or accessing its $150 million ATM funding facility, despite having received board and shareholder approval. The company argues that this restriction infringes upon Singaporean law, which prohibits employee compensation through share issuances.
In light of limited funding options, Genius has begun to reduce its operations, halting all marketing and sponsorship initiatives. The company has initiated the liquidation of a portion of its Bitcoin Treasury, decreasing its holdings from 440 to 430 BTC, to ensure continued operational viability.
On March 19, Genius filed an emergency motion with the US Court of Appeals for the Second Circuit, seeking to vacate the PI as it appeals the initial rulings. Despite a troubling 53% drop in share value—from $0.47 to $0.22 in just six weeks—Genius remains dedicated to preserving its public listing and combating what it deems a coordinated scheme of financial manipulation.
CEO Roger James Hamilton stated that the company “will not bend to fraudsters and market manipulators,” who themselves face multiple lawsuits for misconduct. He pledged that Genius will exhaust all necessary avenues and emphasized,
“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
Earlier reports indicated that Genius had plans to allocate at least 90% of its current and future reserves to Bitcoin, with an announcement made in November of the previous year. The firm intended to embrace a Bitcoin-first strategy, aspiring to be among the first NYSE American-listed companies to fully adopt this approach inspired by Michael Saylor.
The situation continues to develop as Genius navigates through legal challenges and its implications for its Bitcoin investment strategy.
The company’s commitment to innovation in the face of adversity remains resolute, and the ongoing saga illustrates the turbulent intersection of cryptocurrency, regulation, and corporate governance.
