Nvidia is set to defend itself against a class-action lawsuit amid allegations of misleading investors regarding the scale of its sales to cryptocurrency miners. This development follows the United States Supreme Court’s recent dismissal of the company’s appeal, which sought to invalidate the lawsuit. The Supreme Court’s brief order did not provide a rationale but effectively reinstated a previous decision by an appellate court that had revived the suit initially dismissed by a California district court in March 2021.
The appeal stemming from the Ninth Circuit ruling last August centers on claims from a group of Nvidia shareholders. They assert that Nvidia concealed over $1 billion in GPU sales attributed to crypto miners. Furthermore, it is alleged that the company’s CEO downplayed the significance of these sales to the firm’s overall performance. Shareholders argue that the connection between Nvidia ’s sales and the crypto market is significant, citing a dramatic decline in Nvidia ’s stock price in late 2018, which coincided with a downturn in cryptocurrency values.
In its defense, Nvidia contends that the lawsuit is based on fabricated expert opinions about the company’s operations and revenue streams. The company has indicated its readiness to proceed with its defense and expressed a desire for a judicial decision that acknowledges the merits of its previous arguments.
Adding weight to the shareholders’ claims, both the Justice Department and the Securities and Exchange Commission have supported the class group’s position, stating that Nvidia ’s arguments do not reflect the underlying reality. They reference alleged evidence from former Nvidia executives and reports that suggest the company understated its crypto-related revenue by as much as $1.35 billion.
This ongoing legal battle is a crucial chapter for Nvidia , which previously settled charges with the SEC in 2022, paying $5.5 million over inadequate disclosures related to the impact of crypto mining on its gaming business.
