Nvidia, the world’s leading manufacturer of graphics processing units (GPUs), is facing a revived class action lawsuit that alleges the company misled investors about the role of cryptocurrency mining in its revenue during the 2017-2018 crypto boom. Both the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have filed an amicus brief supporting the claims, urging the U.S. Supreme Court to allow the case to proceed.
Nvidia’s Alleged Misrepresentation of Crypto Revenue
The lawsuit claims that Nvidia attributed much of its 2017-2018 revenue surge to increased demand from gamers, while downplaying the significant role that cryptocurrency miners played in boosting sales. According to insider reports, Nvidia’s leadership, including CEO Jensen Huang, allegedly knew about the impact of crypto mining on the company’s revenue but chose not to disclose it to investors.
The DOJ and SEC argue that Nvidia’s decision to mislead investors meets the legal standard for "scienter," or intent to deceive. The evidence presented includes internal documents and testimonies from former employees, which suggest that Nvidia’s leadership was fully aware of the crypto-driven revenue but chose to conceal this information in public statements.
Class Action Lawsuit Moves Forward
After initially being dismissed by a lower court, the case was partially revived by the Ninth Circuit Court of Appeals in June 2024. The Supreme Court is now set to decide whether the lawsuit should proceed, with significant implications for corporate transparency in emerging markets like cryptocurrency.
Nvidia has not yet commented on the case, but the lawsuit highlights the growing need for companies to accurately disclose the impact of volatile markets, such as crypto, on their financial performance.
Source: Decrypt
