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SINGAPORE - Genius Group Limited (NYSE American: GNS), a Singapore-based education company with a focus on AI and Bitcoin, is set to downsize its Bitcoin Treasury as a result of legal actions preventing the firm from raising funds or selling shares. The company, which according to InvestingPro data has seen its revenue decline by 34.48% in the last twelve months, has been embroiled in legal disputes following allegations of fraud against Fatbrain AI (LZGI) shareholders Michael Moe and Peter Ritz, as well as shareholder fraud allegations filed by the SEC.
The U.S. District Court Southern District of New York issued a preliminary injunction on March 13, 2025, that has halted Genius Group’s financing activities and share issuance, following a temporary restraining order granted on February 14, 2025. The company claims that the injunctions were based on false statements and are part of an extortion scheme by Ritz to defraud LZGI shareholders. InvestingPro analysis shows the company maintains a current ratio of 2.52, indicating sufficient liquid assets to meet short-term obligations despite the ongoing legal challenges.
As a result of the legal constraints, Genius Group is undertaking several measures to preserve its operations. The company has filed an emergency motion with the United States Court of Appeals for the Second Circuit to vacate the preliminary injunction. It is also restructuring its operations by downsizing, which includes closing divisions and halting marketing and investment activities.
The injunction has also forced the company to sell part of its Bitcoin holdings, reducing from 440 to 430 Bitcoin, to fund operations. The sale is against the wishes of the company’s board and shareholders but is necessary to maintain the company’s liquidity. Genius Group’s CEO, Roger James Hamilton, expressed dismay at the court’s actions, stating that they never anticipated such legal barriers when they went public in the U.S. in 2022.
The ongoing restrictions have had a significant impact on Genius Group’s financial status. The company’s share price has plummeted by 53% since the temporary restraining order was issued, and its market capitalization has fallen to $17.37 million, representing 40% of the value of its Bitcoin Treasury. InvestingPro data reveals concerning trends, with the company’s Financial Health Score rated as WEAK at 1.47, and an exceptionally high beta of 10.62 indicating significant price volatility compared to the market.
Despite the challenges, Genius Group remains committed to fighting the alleged fraudulent behavior and protecting its shareholders’ interests. The company continues to endorse Bitcoin for its transparency and as a safeguard against the type of fraud currently under litigation.
This report is based on a press release statement from Genius Group Limited.
In other recent news, Genius Group Limited has expanded its Bitcoin Treasury by purchasing an additional $5 million worth of Bitcoin, bringing its total investment to $40 million. This move aligns with the company’s Bitcoin-first strategy, which was initially announced in November 2024. The strategy involves committing 90% or more of its reserves to Bitcoin, with a target of reaching $120 million in Bitcoin holdings. The company’s recent rights offering aims to further bolster its Bitcoin Treasury, with plans to raise up to $50 million. The rights offering is open to shareholders, with proceeds intended to enhance the company’s Bitcoin Treasury. Genius Group has also increased its loan with Arch Lending, a crypto-backed loan platform, from $10 million to $14 million. Additionally, the company has approved a Founder Compensation Plan for CEO Roger Hamilton that includes milestones for increasing the Bitcoin Treasury’s net asset value. Meanwhile, LZG International, Inc. has provided an update on its Asset Purchase Agreement with Genius Group Limited. The specifics of the agreement were not disclosed, but the transaction could signify a notable change in LZG International’s operations.
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