Source: Cointelegraph Original: "{title}"
Singapore-based artificial intelligence company Genius Group has announced that it is temporarily prohibited from expanding its Bitcoin treasury after a U.S. court ordered it to stop selling stock, raising funds, and using investor money to purchase more Bitcoin.
In a statement on April 3, Genius Group said that a New York district court issued a preliminary injunction (PI) and a temporary restraining order (TRO) on March 13, related to the broader controversy surrounding its merger with Fatbrain AI.
Fatbrain AI and Genius Group completed a merger agreement in March 2024, but by October 30, Genius initiated arbitration proceedings to terminate the agreement, accusing Fatbrain AI executives of fraud in the transaction.
Source: Roger James Hamilton
In February of this year, Fatbrain AI executives Michael Moe and Peter Ritz applied for a TRO and a permanent injunction to prevent Genius Group from selling its stock, raising funds, and purchasing more Bitcoin until the arbitration results were released.
The injunction forced Genius Group to shut down departments, halt marketing activities, and sell 10 of its 440 Bitcoins (BTC) to continue funding its operations (valued at over $23 million at current prices). The company has not ruled out the possibility of selling more products in the future.
The company stated, "Genius is taking all necessary measures to minimize Bitcoin sales, but it expects that in the coming months, if the PI remains in effect, it will need to reduce its Bitcoin inventory."
ASX Law stated in an October announcement that Fatbrain AI shareholders also filed two lawsuits in April 2024 against Fatbrain AI executives, including Moe and Ritz, as well as Genius Group, accusing them of violating federal securities laws related to the merger.
The two shareholder lawsuits against Fatbrain AI allege fraudulent conduct during the merger process, resulting in a $30 million loss for shareholders. Source: ASX Law
Genius Group subsequently voluntarily withdrew its lawsuit on February 14.
Genius Group claims that the U.S. court's injunction forced it to violate Singapore law, stating that the injunction also compelled it to stop issuing stock compensation to employees as part of their employment agreements.
"We never imagined that a U.S. court could prevent a company from issuing stock, raising funds, or purchasing Bitcoin—decisions that should be made by public company shareholders or the board, not the court," said Genius Group CEO Roger James Hamilton.
He stated that despite being legally prohibited from expanding its Bitcoin treasury, Genius Group will "continue to shine for Bitcoin."
Fatbrain AI did not immediately respond to Cointelegraph's request for comment.
Genius Group first announced in November 2024 that it had taken the first step in establishing a Bitcoin treasury by purchasing 110 Bitcoins for $10 million.
The company previously announced that its overall goal is to hold 90% or more of its existing and future reserves in Bitcoin, with an initial target of $120 million, a news that caused its stock price to rise by 66%.
According to Google Finance, Genius Group's stock price fell by 9.80% in the most recent trading day to $0.23 and further declined by 3.74% in after-hours trading to $0.22.
Genius Group's stock price fell in the last trading session and after-hours. Source: Google Finance
The stock reached a historical high of over $96 in June 2022, but its market value has since shrunk by more than 99%.
Related: Notable investor Dan Tapiero predicts that under pro-business policies in the U.S., the total market value of cryptocurrencies may exceed $10 trillion by 2025.
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