Quick Facts
Genius Group, a Singapore-based artificial intelligence firm, has been banned from buying more Bitcoin amidst an ongoing dispute with Fatbrain AI, a US-based company.
Background: The Dispute
The ongoing dispute between Genius Group and Fatbrain AI has taken a dramatic turn. In an unprecedented move, a New York District Court has issued a preliminary injunction and temporary restraining order (TRO) blocking Genius Group from selling its shares, raising funds, and using investor funds to buy more Bitcoin.
Genius Group, an AI firm focused on education and knowledge sharing, announced its intention to merge with Fatbrain AI in March 2024. However, by October 2024, Genius Group initiated arbitration procedures to terminate the merger, alleging fraud by Fatbrain AI executives connected to the deal. Fatbrain AI executives Michael Moe and Peter Ritz filed a TRO and permanent injunction to prevent Genius Group from selling its shares, raising funds, and buying more Bitcoin pending the arbitration outcome.
The Injunction
The New York District Court’s preliminary injunction, issued on March 13, bans Genius Group from engaging in any of the aforementioned activities until the arbitration proceedings are resolved. This has forced Genius Group to close divisions, halt marketing activities, and sell 10 Bitcoin (BTC) from its stash of 440, worth over $23 million at current prices. The firm has not ruled out selling more BTC in the future.
Genius Group’s Reaction
Genius Group CEO Roger James Hamilton has spoken out against the injunction, stating that the firm is taking necessary measures to minimize Bitcoin sales, but anticipates that it will need to downsize its Bitcoin Treasury in the coming months if the PI remains in place. Hamilton also claimed that the US court’s decision is in breach of Singaporean laws, as it halts share compensation to employees as part of their employment agreements.
“Genius Group 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,” said Hamilton.
Genius Group’s Bitcoin Treasury
In November 2024, Genius Group announced its intention to build a Bitcoin treasury, purchasing 110 BTC for $10 million. The firm had earlier committed to holding 90% or more of its current and future reserves in BTC, with an initial target of $120 million. This saw the stock price surge by 66%. However, with the injunction in place, Genius Group is facing significant challenges in building its Bitcoin treasury.
Implications for Genius Group
The injunction has pushed Genius Group’s share price down, with a 9.80% drop in the last trading session and a further 3.74% drop after the bell. The stock has lost over 99% of its value since hitting an all-time high of over $96 in June 2022.
The Impact on the Crypto Market
The ongoing dispute between Genius Group and Fatbrain AI highlights the complexities and risks involved in the world of cryptocurrency. The use of court injunctions to restrict a company’s ability to engage in certain activities raises questions about the role of the judiciary in regulating the crypto market.
The Future of Genius Group
With the injunction in place, Genius Group is facing significant challenges in building its Bitcoin treasury. However, the firm remains committed to its vision of creating a Bitcoin-backed economy. In an interview, Hamilton stated, “Genius Group will continue to fly the flag for Bitcoin, even when legally banned from building out its treasury.”
The ongoing dispute between Genius Group and Fatbrain AI is a reminder of the importance of careful due diligence and the need for greater regulatory clarity in the crypto market. As the world of cryptocurrency continues to evolve, investors and companies must be prepared for the unexpected and adapt to changing circumstances.
