Court Allows Nvidia Class Action Over Hidden Crypto Revenue

district court has allowed a class action lawsuit against Nvidia and CEO Jensen Huang to proceed following investor claims that over $1 billion of the company’s crypto revenue was actually hidden in its gaming offering. The tech giant also failed to prove that its statements on crypto mining revenue did not affect the firm’s stock price.

Key takeaways

Quick scan — what you need to know:

• district court has allowed a class action lawsuit against Nvidia and CEO Jensen Huang to proceed following investor claims that over $1 billion of the company’s crypto revenue was actually…
• The tech giant also failed to prove that its statements on crypto mining revenue did not affect the firm’s stock price.
• False Statements A Wednesday filing suggests that during the 2017-2018 crypto boom, Nvidia misled investors by having them believe they were buying its gaming GPUs.
• However, the sales were actually tied to the crypto market, and once prices began falling, the firm was left with a lot of unsold inventory that caused its stock price to plummet.

Background

What led here, in plain terms:

• Plaintiffs first sued the company in 2018, alleging that it had not disclosed around $1.3 billion of the total revenue made from these sales and that Huang had downplayed the actual demand.
• At the time, the CEO appeared in several interviews claiming that the firm’s crypto-related demand was “small.” He also insisted the gaming division was its core business and that…
• Plaintiffs argue that this was done to convince investors that Nvidia’s gaming business was separate from its mining operations.
• According to the filings, the company’s defense was based on the argument that these statements were not made with the intention of influencing investors and, therefore, had no price impact.

Why it matters

Why readers and decision-makers should care:

• Securities and Exchange Commission (SEC) previously issued the company a $5.5 million fine for failing to disclose how crypto mining affected its general revenue.
• Regulators said that it should have told investors that most of its GPU demand came from the miners.
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