The Singapore-based artificial intelligence company Genius Group has announced that it faces a temporary prohibition on expanding its Bitcoin treasury following a court order from the US, which has restricted it from selling shares, raising capital, and utilizing investor funds to purchase additional Bitcoin.
According to a statement from Genius Group on April 3, a New York District court issued a preliminary injunction (PI) and a temporary restraining order (TRO) on March 13 as part of a larger dispute regarding its merger with Fatbrain AI.
Although Fatbrain AI and Genius Group finalized their merger and purchase agreement in March 2024, Genius initiated arbitration on October 30 to terminate the agreement, alleging fraudulent actions by Fatbrain AI executives related to the transaction.
Source: Roger James Hamilton
In February, Fatbrain AI executives Michael Moe and Peter Ritz sought the TRO and a permanent injunction, which prevents Genius Group from selling shares, raising funds, and buying more Bitcoin while the arbitration is pending.
This injunction has compelled Genius Group to shut down certain divisions, cease marketing efforts, and sell 10 Bitcoin (BTC) from its total of 440, valued at over $23 million at current rates, in order to sustain its operations. The company hasn’t excluded the possibility of further sales in the future.
“Genius is taking every necessary step to limit Bitcoin sales but acknowledges that it may need to reduce its Bitcoin treasury in the upcoming months if the PI continues to remain effective,” stated the firm.
In April 2024, shareholders of Fatbrain AI filed two lawsuits against its executives, including Moe and Ritz, as well as Genius Group, alleging violations of federal securities laws related to the merger, according to an October statement from ASX Law.
Two shareholder lawsuits against Fatbrain AI claimed that conduct during the merger was fraudulent, resulting in a $30 million loss to shareholders. Source: ASX Law
Subsequently, Genius Group was voluntarily dismissed from the lawsuits on February 14.
Genius Group alleges it is violating Singapore law by adhering to the order
Genius Group states that the US court injunction has placed it in a position of violating Singapore law by suspending share compensation for employees as stipulated in their employment contracts.
“We never anticipated that a US court could restrict our ability to issue shares, raise funds, or purchase Bitcoin—actions that would typically be determined by a public company’s shareholders or Board instead of a court,” commented Genius Group CEO Roger James Hamilton.
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He affirmed that the firm would “continue to advocate for Bitcoin,” even while legally barred from expanding its treasury.
Fatbrain AI did not immediately respond to Cointelegraph’s inquiry for comment.
Initially, in November 2024, Genius Group revealed its intent to construct a Bitcoin treasury by acquiring 110 Bitcoin for $10 million.
The firm had previously stated its overall goal of dedicating 90% or more of its current and future reserves to Bitcoin, targeting an initial total of $120 million, which subsequently led to a 66% surge in its stock price.
As of the last trading session, Genius Group’s share price decreased by 9.80% to $0.23, followed by an additional 3.74% drop after the bell to $0.22, according to data from Google Finance.
Genius Group’s share price experienced a decline during the last trading session and after hours. Source: Google Finance
The stock reached an all-time high of over $96 in June 2022 but has since depreciated by more than 99%.
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