Genius Group Sells Bitcoin Amidst Legal Battle
Singapore-based education and technology company, Genius Group, has been ordered by a US court to sell its Bitcoin holdings. This action is a direct result of an ongoing legal dispute that has severely restricted the company's financial operations.
The Genius Group Lawsuit
A US District Court in the Southern District of New York issued a preliminary injunction, preventing Genius Group from issuing shares or raising capital. This followed a failed agreement with Fatbrain AI, which resulted in fraud accusations from shareholders and an SEC investigation. The court's temporary restraining order (TRO) also blocks access to investor funds.
The TRO and preliminary injunction were specifically designed to stop Genius Group from selling shares, raising funds (including a $150 million ATM funding facility), and purchasing additional Bitcoin. Moe and Ritz were accused of attempting to extort millions by exploiting legal processes.
Key Impacts:
- Genius Group’s Bitcoin reserves dropped from 440 BTC to 430 BTC.
- Share price plummeted 53% from $0.47 to $0.22.
- Company market capitalization is now 40% of its Bitcoin treasury value.
Genius Group's Bitcoin Strategy
Genius Group adopted a Bitcoin-first strategy in November 2024, designating Bitcoin as its treasury reserve asset. CEO Roger James Hamilton championed this approach, mirroring MicroStrategy’s strategy. A previously approved $33 million rights offering for Bitcoin purchases is now rendered impossible by the court order.
Implications for Other Crypto-Holding Firms
Genius Group's situation highlights the legal risks associated with corporate Bitcoin holdings. While companies like MicroStrategy continue accumulating Bitcoin, this case underscores the importance of legal compliance. Experts generally believe adherence to regulatory guidelines minimizes such risks. It's worth noting that the current US SEC leadership maintains a largely pro-crypto stance, although this was not always the case.
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