Genius Group, an AI-powered, Bitcoin-first education group, has announced that it will sell its Bitcoin treasury. The announcement is a deviation from the norm of institutions and whales copiously buying BTC. However, Genius is not selling the treasury to cash it on its BTC holdings. 

In a report released by the group itself, it revealed that it is being forced to sell its Bitcoin treasury after getting barred from selling shares, raising funds, and specifically using investor funds to purchase Bitcoin by the United States District Court Southern District of New York (SDNY).

The source of the legal tension

The step taken by the United States District Court, Southern District of New York (SDNY) was caused by legal tension that reportedly stems from a dispute involving Michael Moe and Peter Ritz.

On October 30, 2024, Genius initiated arbitration procedures to terminate its Asset Purchase Agreement (APA) with Fatbrain AI (LZGI), and on December 17, 2024, they agreed to a preliminary injunction on the company’s shares related to the APA.

This came after LZGI’s shareholders filed a lawsuit against LZGI and its officers, Moe and Ritz, alleging a history of fraud, including in their actions related to the APA, and after the SEC filed shareholder fraud allegations for defrauding LZGI shareholders, amongst others.

In addition to those filings, on February 14, 2025, Moe and Ritz filed for a Temporary Restraining Order (TRO) and Preliminary Injunction (PI) in a bid to stop Genius from selling any shares or raising any funds, including through the use of its $150M ATM funding, and specifically from buying Bitcoin.

The TRO was granted on the same day, while the SDNY granted the PI on March 13, 2025. Over the last six weeks, Genius has attempted to convince the court through multiple letters and motions explaining that the TRO and PI did not maintain the status quo pending arbitration and that they were based on false statements designed to defraud the court.

Genius also alleged that the filing of the TRO and PI was an attempt to extort more money from the company.

Among the documents Genius provided the court was a transcript of a meeting with Ritz and Genius executives recorded in New York on February 27, 2025. In it, Ritz explained how he weaponized the TRO and PI process in order to get millions more out of Genius that would sponsor his personal scheme to defraud 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.

Genius was initially named in both LZGI shareholder lawsuits but has been voluntarily dismissed from both. However, the PI has remained in effect.

This is why Genius’s financing and Bitcoin treasury activities have been blocked by court order for the past six weeks, a direct opposition to the wishes, consent, and approvals of the company’s board and shareholders.

The injunction also prevents Genius from offering share compensation to employees as part of their long-standing employment agreements. This has forced Genius into an unusual position of being legally compelled by a U.S. court to directly break Singaporean law, where Genius Group is based.

A full shareholder guide to our $GNS rights offering is now online at https://t.co/EXaHgTBxhf pic.twitter.com/RWZbd3Sjo1

— Roger James Hamilton (@rogerhamilton) January 22, 2025

What Genius is doing about it

The PI, which legally blocks Genius from being able to fund its operations, is detrimental and has made it necessary for the company to take action.

One avenue it plans to explore is pursuing an appeal with the Second Circuit. The company has already 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.

There are also restructuring operations ongoing with the company taking steps to downsize its operation since it is legally blocked from issuing shares or raising funds. The downsizing will involve closing various divisions and canceling all event sponsorships, marketing activities, and investing activities until the PI is lifted and the company is legally able to resume its growth plans.

Genius is also doing all it can to minimize Bitcoin sales but anticipates that it will need to downsize its Bitcoin treasury in the coming months in case the PI is not lifted. As of April 3, the Company has had to whittle down its Bitcoin holdings from 440 Bitcoins to 430 Bitcoins.

The LZGI complaints against Ritz and Moe highlight an ongoing history of defrauding investors by diverting funds for personal gain and pushing targeted companies into insolvency and closure.

The SEC complaint details a pattern of defrauding investors and short-selling companies, including LZGI. Genius believes that this same MO is being applied to it and has provided evidence suggesting that to the court as it attempts to fight against the behavior it deems fraudulent.

In the time 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 is convinced that the ongoing restrictions by the 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 they never thought they would see the day when a U.S. court could block the company from being able to issue shares, raise funds, or buy Bitcoin – actions that would usually be left to 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,” Hamilton said.

He has reiterated his commitment to fighting off the fraudsters and market manipulators.

“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,” Hamilton said.

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