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The US Supreme Court will hear Nvidia’s cryptocurrency mining revenue case
The United States Supreme Court agreed to hear the appeal Nvidia Corporation seeking to dismiss a securities fraud lawsuit alleging the company misled investors about the extent of its revenue from the cryptocurrency industry.
Nvidia’s appeal to the Supreme Court
Nvidia’s appeal was heard by judges after the 9th U.S. Circuit Court of Appeals reinstated a class action lawsuit brought by shareholders against Nvidia and its CEO, Jensen Huang.
The lawsuit was brought by Swedish investment management firm E. Ohman J Fonder AB and seeks monetary damages in an undisclosed amount.
Nvidia and its top executives, as a result, are accused of making false statements in 2017 and 2018 regarding the importance of cryptocurrency-related sales to the company’s revenue.
History and allegations of the case
The case was filed in 2018 with the primary allegation that Nvidia violated the Securities Exchange Act of 1934. The plaintiffs alleged that Nvidia failed to provide accurate information about the percentage of its revenue coming from cryptocurrencya process that involves using GPUs to solve mathematical problems in mining digital currencies such as Bitcoin.
This supposed omission hid the fact that cryptomining had a significant negative effect on Nvidia’s deals from investors and analysts.
The lower court had dismissed the case in 2021, however, but the 9th Circuit in a 2-1 decision decided in the second half of 2021 that the lawsuit can move forward because the plaintiffs plausibly alleged that Nvidia made “representations knowingly or recklessly false or misleading. “
Previous transactions and ongoing litigation
Nvidia has speculated that the 9th Circuit’s decision could result in “abusive and speculative litigation,” which is why the company has called on the Supreme Court to get involved. In 2022, Nvidia was accused by US authorities and the company decided to pay 5 dollars. 5 million for failing to adequately disclose the effects of cryptomining on his gaming unit. This settlement, however, did not stop the shareholders’ cause from continuing to the next level.
Additionally, the justices also agreed to hear another similar case involving Meta Platforms Inc. in which the social media company’s shareholders alleged that the company misled investors about misusing user data.
Earlier this month, US regulators opened an investigation into Nvidia Microsoft and OpenAI on possible antitrust issues in the artificial intelligence market. These ongoing investigations are led by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) and are aimed at handling market power and competition cases.
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