The ongoing class-action lawsuit against Nvidia, a leading tech giant, has garnered support from two influential US regulatory agencies, the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ). The lawsuit, initiated in 2018 and now at the Supreme Court level, alleges that Nvidia misrepresented sales to crypto miners.
In their amicus briefs, the SEC and DOJ express their interest in the case due to its implications for laws that impact their enforcement actions in securities lawsuits. They underscore the importance of private securities-fraud class actions in complementing criminal prosecutions and civil enforcement actions undertaken by the regulatory agencies.
The crux of the class-action lawsuit revolves around Nvidia’s alleged concealment of over $1 billion in graphics processing unit (GPU) sales to crypto miners, a significant aspect of their business operations typically associated with PC gaming. The case faced dismissal initially but was revived when an appellate court revisited it in 2023.
In 2022, the SEC imposed a fine on Nvidia for “inadequate disclosures,” citing the company’s failure to accurately disclose the extent of GPU sales tied to crypto mining during the fiscal year of 2018. Nvidia was found to have reported revenue growth in its gaming segment without explicitly attributing a substantial portion of it to crypto mining activities.
As part of the settlement with the SEC, Nvidia agreed to a cease-and-desist order and a $5.5 million fine. The regulatory scrutiny surrounding Nvidia’s actions underscores the significance of transparency and accurate disclosure in financial reporting, especially in industries where emerging trends like crypto mining can have a material impact on revenue.
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With regulatory agencies closely monitoring cases like the Nvidia lawsuit, companies in the tech and crypto sectors are reminded of the importance of compliance and transparency in their business operations. As the legal proceedings unfold, the outcome of this case could set a precedent for how companies disclose information related to emerging trends like crypto mining in their financial statements.