Two prominent US regulatory agencies are supporting a class-action lawsuit against tech giant Nvidia over sales to crypto miners that were allegedly misrepresented.
According to recent court filings, the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) are filing amicus briefs in support of the group of investors suing Nvidia, a lawsuit that started in 2018 and has since reached the Supreme Court.
In the amicus briefs, the regulatory bodies say they are interested in the case because it’s related to laws that enhance their enforcement actions in securities lawsuits.
“This case concerns the heightened requirements for pleading falsity and scienter in private securities-fraud class actions under the Private Securities Litigation Reform Act of 1995 (PSLRA).
Meritorious private actions are an essential supplement to criminal prosecutions and civil enforcement actions brought by the Department of Justice and the Securities and Exchange Commission.”
The class action lawsuit claims that Nvidia hid over $1 billion in graphics processing unit (GPU) sales to crypto miners, a tool that is essential to their business model that is usually associated with PC gaming. However, the case was dismissed until an appellate court took it up in 2023.
In 2022, the SEC fined Nvidia for “inadequate disclosures” for failing to accurately declare how much of their GPU sales during the fiscal year of 2018 was linked to crypto mining.
“The SEC’s order finds that, during consecutive quarters in NVIDIA’s fiscal year 2018, the company failed to disclose that crypto mining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming…
In two [tax forms] for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by crypto mining.”
At the time, Nvidia agreed to a cease-and-desist order and to pay a $5.5 million fine.
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