Court blocks Genius Group from trading and holding BTC
First court injunction against bitcoin purchases
A New York court has prohibited Singapore-based Genius Group from trading its shares or holding Bitcoin. Genius Group, focused on education and AI, is listed on the NYSE American under the ticker GNS and has become embroiled in a legal battle with its own executives following shareholder attempts to cancel an asset purchase agreement with Fatbrain AI (LZGI).
Key Takeaways
- Genius Group is suing its own executives over the unlawful sale of assets worth more than $30 million.
- The fraud suspects, acting through their company LZGI, are seeking a court order to block Genius operations — including its Bitcoin purchases.
- The ruling by the New York District Court casts doubt not only on the company’s Bitcoin strategy, but also on its ability to continue operating.
A complex and tangled legal case
This is reportedly the first time a U.S. court has barred a private company from selling shares, raising funds, or using investor capital to purchase Bitcoin.
According to Cryptonews.com, the ruling was issued on April 3 by the U.S. District Court for the Southern District of New York (SDNY), as part of the ongoing legal dispute between Genius Group and LZGI regarding the asset acquisition deal.
Genius has been executing a Bitcoin investment strategy and spent $42 million to acquire Bitcoin. It currently holds 430 BTC worth around $46 million, while its market capitalization stands at $33.1 million. The company planned to invest another $120 million in Bitcoin using loans and reserves. However, this strategy is now in jeopardy due to the court’s ruling. Genius has also been forced to liquidate some of its Bitcoin holdings to fund operations amid the court restrictions.
“When we conducted our IPO in the U.S. in 2022, we believed that listing on an American exchange would benefit a Singapore-based company like ours. But we never imagined that a U.S. court could prevent a public company from issuing shares, raising capital, or buying Bitcoin — actions typically governed by shareholders or the board, not a court,” said Genius Group CEO Roger James Hamilton.
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A plot to drain Genius Group?
The initial order in the case was issued in mid-February at the request of Genius executives Michael Moe and Peter Ritz, who were later accused of fraud. The SEC has also opened a case related to their alleged deception of shareholders.
Since the initial injunction, Genius Group has filed multiple letters and motions in court, arguing that the court’s measures are enabling opponents to extort the company and its investors.
Genius stock dynamics for 30 days. Source: TradingView
Since the order was issued, Genius Group’s stock has plunged 53%, from $0.47 to $0.22. Today, the company's market cap is only 40% of the value of its Bitcoin reserves, raising serious concerns about its ability to continue operating.
As we wrote, in a bold move reflecting the growing trend of corporate Bitcoin adoption, Genius Group Limited has added $10 million to its Bitcoin holdings, bringing its total to 319.4 BTC, currently valued at $30 million.
