AI-powered training group Genius Group has revealed that it’s being compelled to unload its Bitcoin reserves following a restriction imposed by the US District Courtroom (Southern District of New York), which prevents the corporate from elevating cash, issuing inventory, or investing investor funds in BTC.
Its chief exec now claims that courtroom orders have been primarily based on fraud and are pushing the corporate into unlawful territory.
Fraud Accusations, Authorized Drama, and Bitcoin
In its official press release, the corporate defined the escalating authorized challenges it faces as a consequence of a dispute involving Fatbrain AI (LZGI), its officers, and a controversial asset buy settlement (APA).
The arbitration proceedings to terminate the APA started on October 30, 2024, after shareholder lawsuits and fraud allegations have been made towards LZGI executives Michael Moe and Peter Ritz. A preliminary injunction (PI) was agreed upon by each events on December seventeenth of that yr, which briefly halted Genius’s share-related actions linked to the APA.
The scenario intensified after the US Securities and Trade Fee (SEC) filed shareholder fraud prices towards Moe and Ritz. At their request, a Short-term Restraining Order (TRO) was granted on February 14, 2025. This prevented Genius from promoting shares, elevating funds, and even buying Bitcoin.
The Singapore-based agency claimed the TRO and subsequent PI granted by the US District Courtroom for the Southern District of New York (SDNY) have been primarily based on false statements and meant to extort the corporate financially. In its protection, Genius submitted a recorded February 27 assembly transcript to the courtroom, through which Ritz allegedly detailed how he exploited the authorized course of to stress the corporate for additional funds.
This transcript has additionally been introduced by LZGI shareholders in a separate lawsuit filed in Florida, the place Genius has since been dismissed as a defendant.
Because the PI stays in impact, Genius asserted that it’s legally barred from elevating capital or using its $150 million ATM funding facility, regardless of board and shareholder approval. This consists of prohibitions on compensating workers by means of share issuances – an motion the corporate argues violates Singapore legislation.
Genius has begun downsizing operations because of having no entry to conventional funding. This has led to the halting of all advertising and sponsorship efforts. The corporate has even began liquidating a portion of its Bitcoin Treasury, lowering its holdings from 440 to 430 BTC to maintain operations.
On March 19, the corporate stated that it filed an emergency movement with the US Courtroom of Appeals for the Second Circuit to vacate the PI, pending the end result of its attraction. Regardless of a 53% drop in its share value – from $0.47 to $0.22 – over the previous six weeks, the corporate insists it stays dedicated to preserving its public itemizing and tackling what it describes as a coordinated scheme of monetary manipulation.
It went on to warn that the continued court-imposed restrictions pose a severe menace to its operational viability however expressed confidence that its authorized and strategic actions would assist mitigate the dangers.
Its CEO, Roger James Hamilton, stated that the corporate “is not going to bend to fraudsters and market manipulators” who’re themselves the topic of a number of lawsuits for fraud and misconduct. He promised that Genius would take all actions vital and added,
“We may also proceed to fly the flag for Bitcoin, even when legally banned from constructing our Bitcoin Treasury. We imagine Bitcoin ensures transparency and prevents precisely the type of wire fraud and shareholder fraud which might be the topic of the present lawsuits.”
Genius Following Technique’s Footsteps
As reported earlier, Genius first announced plans to allocate a minimum of 90% of its present and future reserves to Bitcoin again in November final yr.
The AI-driven training and enterprise acceleration agency had then stated that with its Bitcoin-first technique, it hoped to be among the many first NYSE American-listed firms to embrace Michael Saylor-led Technique’s Bitcoin tactic absolutely.
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