A US court has ordered Singapore-based Genius Group to halt share sales and fundraising activities, effectively forcing the company to sell a portion of its Bitcoin holdings to maintain operations. 

The restriction, imposed by the United States District Court for the Southern District of New York, stems from an ongoing legal dispute involving Genius Group, Fatbrain AI (formerly LZG International), and several of its executives.

Genius Group, listed on the NYSE American under the ticker GNS, describes itself as an AI-focused education firm that had adopted Bitcoin as part of its treasury strategy. However, a preliminary injunction granted on March 13, 2025, prevents the company from issuing new shares, raising capital, or using investor funds to purchase Bitcoin.

The injunction follows arbitration proceedings initiated by Genius Group in October 2024 to terminate an Asset Purchase Agreement with Fatbrain AI. 

Legal challenges surrounding that agreement have escalated in recent months, with LZGI shareholders filing lawsuits against Fatbrain executives Michael Moe and Peter Ritz. The complaints allege a pattern of fraud, including misconduct related to the asset deal.

On Feb. 14, Moe and Ritz secured a temporary restraining order (TRO) and later the preliminary injunction, arguing that Genius Group should be prevented from raising funds or expanding its Bitcoin holdings. Genius has pushed back, filing court motions accusing the pair of misleading the court and using legal tactics as a means of extortion.

A recording submitted by Genius to the court allegedly captures Ritz detailing how the injunction was used to exert financial pressure on the company. This same transcript was also submitted in a separate derivative case brought by LZGI shareholders in Florida federal court.

Genius, initially named in the shareholder lawsuits, has since been voluntarily dismissed from both cases. However, the ongoing injunction continues to restrict the company’s financial activities. According to Genius, this has left it unable to fulfill employee compensation agreements or raise funds necessary for day-to-day operations, actions it claims conflict with Singaporean legal obligations.

In response, Genius Group has filed an emergency motion with the US Court of Appeals for the Second Circuit, seeking to overturn the preliminary injunction. The appeal was submitted on March 19, and the company is currently awaiting the outcome. 

At the same time, the company has begun restructuring its operations. It is closing several business divisions, suspending all event sponsorships and marketing efforts, and pausing investment activities until the legal restrictions are lifted.

The company has also started to liquidate part of its Bitcoin treasury to fund operations, reducing its holdings from 440 BTC to 430 BTC. Genius stated that further Bitcoin sales may be necessary if the court order remains in place.

The impact on Genius Group’s stock has been severe. Since the court first issued the TRO on February 14, the company’s share price has dropped over 50%, falling from $0.47 to $0.22. Its current market capitalization now sits at just 40% of the value of its Bitcoin holdings.

Genius CEO Roger James Hamilton expressed frustration at the legal restrictions, saying it was “unthinkable” that a US court could block a foreign public company from raising capital or executing board-approved financial decisions. Hamilton emphasized the company’s commitment to defending its shareholders and its vision, even as it continues to face what it believes are malicious legal attacks.