Genius Group Ltd ( GNS ) shares are trading lower on Thursday following news that the company is being compelled to sell its Bitcoin treasury.

The move comes after a court ruling in the U.S. District Court Southern District of New York, which blocked Genius from selling shares, raising funds and using investor money to purchase Bitcoin.

This injunction was granted as part of a larger legal battle with Fatbrain AI, part of Lzg International Inc ( LZGI ) , where Genius had initiated arbitration to terminate its asset purchase agreement with the company.

The court’s decision is based on fraud allegations against LZGI executives Michael Moe and Peter Ritz, who have been accused of defrauding shareholders.

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Genius filed motions and presented evidence of what it claims is a scheme to extort money from the company through the legal process.

As a result, Genius’s ability to finance its operations and issue share compensation to employees has been blocked, forcing the company to consider drastic measures.

In response, Genius is actively appealing the injunction, while restructuring its operations, including downsizing and halting marketing and investment activities.

The company has been forced to sell some of its Bitcoin holdings to sustain operations, reducing its treasury from 440 Bitcoin to 430 Bitcoin.

Despite the challenges, CEO Roger James Hamilton remains committed to fighting fraud and market manipulation and intends to protect shareholders’ interests.

The ongoing restrictions, however, pose a serious risk to the company's future operations, with Genius’ stock price falling 53% since the temporary restraining order was imposed.

GNS Price Action: Genius shares are trading lower by 11.88% to 22 cents at publication Thursday.

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