Genius Group Blocked from Raising Funds and Buying Bitcoin by New York Court

Rhea-AI Summary

Genius Group (NYSE: GNS) has been blocked by the United States District Court Southern District of New York from raising funds, selling shares, and buying Bitcoin. The court order stems from legal proceedings involving Fatbrain AI (LZGI) following a disputed Asset Purchase Agreement.

The company is being forced to sell its Bitcoin Treasury, having already reduced holdings from 440 to 430 Bitcoin. The Temporary Restraining Order (TRO) and Preliminary Injunction (PI) have been in effect for six weeks, during which GNS's share price dropped 53% from $0.47 to $0.22, with market capitalization now at 40% of its Bitcoin Treasury value.

In response, Genius Group is:

• Pursuing an appeal with the Second Circuit
• Restructuring operations and downsizing
• Reducing Bitcoin Treasury holdings
• Fighting to maintain public listed status

Positive

• None.

Negative

• Court blocked ability to raise funds, sell shares, and buy Bitcoin
• Forced to sell Bitcoin Treasury holdings, reduced from 440 to 430 Bitcoin
• Share price dropped 53% in six weeks to $0.22
• Market cap declined to 40% of Bitcoin Treasury value
• Company forced to downsize operations and cancel activities
• Legal restrictions pose serious risk to continued operations

Insights

Legal Analyst

The New York court's injunction against Genius Group represents an extraordinary judicial intervention into a public company's operations with severe consequences. The court has effectively paralyzed the company by restricting its ability to raise capital, issue shares, or purchase Bitcoin—core activities for a self-described "Bitcoin-first education group."

This legal entanglement stems from a disputed Asset Purchase Agreement with Fatbrain AI, but has escalated into a complex web of litigation involving allegations of fraud, market manipulation, and extortion. Most concerning is the court's willingness to maintain these restrictions despite Genius Group's assertions that they presented evidence of extortion attempts and false statements to the court.

The preliminary injunction places Genius Group in an untenable position of being unable to fund operations through normal channels, forcing Bitcoin liquidation and operational downsizing. The company claims it's even being compelled to violate Singapore law regarding employee compensation, creating a problematic cross-jurisdictional conflict.

This case highlights the substantial risks foreign companies face when listing on U.S. exchanges—their ability to operate can be severely compromised through U.S. court actions, regardless of home country governance. With the appeal to the Second Circuit pending, Genius Group's very survival may depend on swift judicial relief from these extraordinary restrictions.

Financial Analyst

The court-imposed restrictions on Genius Group have created a severe liquidity crisis that threatens the company's operational viability. Being blocked from accessing capital markets through its $150 million ATM facility or issuing shares has forced the company to liquidate its strategic Bitcoin reserves—directly undermining its core "Bitcoin-first" business philosophy.

The financial metrics paint a disturbing picture: the stock has plummeted 53% since the TRO was issued, and the company's market capitalization has collapsed to just 40% of its Bitcoin Treasury value. This extreme discount to crypto holdings indicates the market is pricing in substantial operational losses and potential failure.

The forced reduction of Bitcoin holdings from 440 to 430 BTC is particularly troubling as it's clearly not a strategic decision but a desperate measure to fund ongoing operations. Without access to capital markets, this liquidation trend will likely accelerate, gradually eroding what appears to be the company's primary asset.

This situation represents a textbook liquidity trap: the company requires capital to operate, but court restrictions prevent capital raising, forcing asset liquidation at potentially unfavorable terms. Unless the Second Circuit provides relief quickly, Genius Group faces a spiral of declining assets, reduced operations, and diminishing strategic options that significantly threatens shareholder value.

SINGAPORE, April 03, 2025 (GLOBE NEWSWIRE) -- Genius Group Limited (NYSE American: GNS) (“Genius Group” or the “Company”), a leading AI-powered, Bitcoin-first education group, today announced that it is being forced to sell its Bitcoin Treasury after having been blocked from selling shares or raising funds, and specifically from using investor funds to buy Bitcoin by the United States District Court Southern District of New York (SDNY).

As previously reported by the Company, on October 30, 2024 Genius initiated arbitration procedures to terminate its Asset Purchase Agreement (APA) with Fatbrain AI (LZGI), and on December 17, 2024 both parties agreed to a preliminary injunction on the Company’s shares related to the APA (Case 1:24-cv-08468-MKV).

This took place after LZGI’s shareholders filed a lawsuit against LZGI and its officers, Michael Moe and Peter Ritz alleging a history of fraud, including in their actions related to the APA (Case 1:24-cv-07551), and after the SEC filed shareholder fraud allegations for defrauding LZGI shareholders amongst others (Case 2:24-cv-00918).

Further to these filings, on February 14, 2025, Moe and Ritz filed for a Temporary Restraining Order (TRO) and Preliminary Injunction (PI) to prevent Genius from selling any shares, or raising any funds, including through the use of its $150m ATM funding, and specifically from buying Bitcoin. On the same day, the TRO was granted, and on March 13, 2025, the SDNY granted the PI.

Over the last six weeks, Genius has filed multiple letters and motions to the court explaining that the TRO and PI did not maintain the status quo pending arbitration, that they were based on false statements designed to defraud the court, and the intent of the filing of the TRO and PI was to extort further money from Genius.

Genius also filed with the court a transcript of a meeting with Ritz and Genius executives recorded in New York on February 27, 2025 in which Ritz explained in detail how he has weaponized the TRO and PI process in order to extort millions more out of Genius to aid his personal scheme to defraud his LZGI shareholders.

This transcript has also been filed by LZGI’s shareholders in their derivative case against LZGI, Moe and Ritz in the United States District Court Southern District of Florida (Case 1:25-cv-21062-JEM). Genius, which was initially named in both LZGI shareholder lawsuits has subsequently been voluntarily dismissed from both.

To date, the PI has remained in effect. As a result, Genius has had its financing and Bitcoin Treasury activities blocked by court order for the last six weeks, in direct opposition to the wishes, consent and approvals of the Company’s Board and shareholders. As the injunction also prevents Genius from issuing share compensation to employees as part of their long standing employment agreements, Genius is in the unusual position of being legally compelled by a US court to directly break Singapore law.

As a result of the PI, which legally blocks Genius from being able to fund its operations, Genius is currently taking the following actions:

• Pursuing an appeal with the second circuit: The Company filed an emergency motion to vacate the PI and for an immediate administrative stay with the United States Court of Appeals for the Second Circuit on March 19, 2025, and is awaiting the outcome of the appeal.
  
• Restructuring operations: With the legal block on the Company’s ability to issue shares or raise funds, the Company is taking steps to downsize its operations, including closing various divisions and cancelling all event sponsorships, marketing activity, and investing activities until such time that the Company is legally able to resume its growth plans.
  
• Downsize its Bitcoin Treasury: By blocking all share sales and all receipt of investor funds, the Court is forcing the Company to sell its Bitcoin Treasury to fund its operations. Genius is taking all necessary measures to minimize Bitcoin sales but anticipates that it will need to downsize its Bitcoin Treasury in the coming months in the event the PI remains in place. As at today’s date, the Company has had to reduce its Bitcoin holdings from 440 Bitcoin to 430 Bitcoin.
  
• Retaining its public listed status: The LZGI complaints against Ritz and Moe details an ongoing history of defrauding investors by diverting funds for personal gain and pushing the companies they target into insolvency and closure. The SEC complaint details a pattern of defrauding investors and short selling companies including LZGI. Genius has provided evidence to the court that this same modus operandi is now being applied to Genius. The Company is committed to fighting against this fraudulent behaviour using all legal means available.
  

In the six weeks since the TRO against Genius was issued on 14 February 2024, Genius’ share price has dropped 53% from $0.47 to $0.22, and the Company’s market capitalization is currently 40% of the value of its Bitcoin Treasury. The Company believes that the ongoing restrictions by SDNY on Genius’ pose a serious risk to its ability to continue operations. However, the Company also believes the actions it is taking will mitigate these risks.

Roger James Hamilton, CEO of Genius Group, said “When Genius had its IPO in the US in 2022, we believed exposure to the US public market would be of benefit to a Singapore-based company like ours. We never dreamed that it was possible that a US court could block the company from being able to issue shares, raise funds or buy Bitcoin – all actions that would normally be decided by a public company’s shareholders or Board rather than a court. We especially did not expect that such destructive actions could be successfully achieved through the courts by individuals who were actively working against the interests of our company’s shareholders and Board.”

“We will not bend to fraudsters and market manipulators that are themselves the subject of multiple lawsuits for fraud and misconduct. We will continue to take all actions necessary and possible to protect the interests of our shareholders and the future of Genius Group. 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.”

About Genius Group

Genius Group (NYSE: GNS) is a Bitcoin-first business delivering AI powered, education and acceleration solutions for the future of work. Genius Group serves 5.4 million users in over 100 countries through its Genius City model and online digital marketplace of AI training, AI tools and AI talent. It provides personalized, entrepreneurial AI pathways combining human talent with AI skills and AI solutions at the individual, enterprise and government level. To learn more, please visit www.geniusgroup.net.

For more information, please visit https://www.geniusgroup.ai/

Forward-Looking Statements 

Statements made in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of words such as “may,” “will”, “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company's Annual Reports on Form 20-F, as may be supplemented or amended by the Company's Reports of a Foreign Private Issuer on Form 6-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise. No information in this press release should be construed as any indication whatsoever of the Company’s future revenues, results of operations, or stock price.

Contact
For enquiries, contact investor@geniusgroup.ai

FAQ

How much has Genius Group's (GNS) Bitcoin holdings decreased due to the court order?

GNS has reduced its Bitcoin holdings from 440 to 430 Bitcoin due to the court-mandated restrictions on fundraising.

What is the current market impact of the SDNY court order on GNS stock?

Since the TRO on February 14, 2025, GNS share price dropped 53% from $0.47 to $0.22, with market cap at 40% of Bitcoin Treasury value.

What operational changes is GNS implementing due to the court restrictions?

GNS is downsizing operations, closing divisions, cancelling event sponsorships, marketing activities, and investing activities.

What legal actions is Genius Group (GNS) taking against the court restrictions?

GNS filed an emergency motion to vacate the PI and for immediate administrative stay with the U.S. Court of Appeals for the Second Circuit on March 19, 2025.