DOJ and SEC back Supreme Court review of Nvidia's crypto-related fraud case.
Nvidia faces a revived lawsuit over an alleged misrepresentation of crypto revenue.
Former SEC officials and investors urge the court to reopen the Nvidia fraud case.
The U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have asked the Supreme Court to reconsider a securities fraud lawsuit in which Nvidia is accused of misleading investors about crypto-related sales.
A week after South Dakota filed suit, U.S. Solicitor General Elizabeth Prelogar and SEC lawyer Theodore Weiman filed an amicus brief on Oct. 2, arguing the case is important to preserve standards in securities fraud cases. The appeal reflects the government’s interest in continuing legal interpretations of the Private Securities Litigation Reform Act (PSLRA) of 1995 under appeal.
Nvidia initially appeared to satiate the suit, which was filed in 2018 when Nvidia overstated its crypto mining revenue. Dismissed in 2021, the case was revived 2021 under a 2-1 ruling by the 9th Circuit Court of Appeals. Team DOJ and SEC believe class action is the path to the Supreme Court.
Nvidia Accused of Misleading Crypto Revenue Claims
Nvidia is accused of focusing crypto mining sales away from investors' questions about switching platforms following a market crash. The complaint also says that Nvidia's revenue forecasts for 2018 included more than $400 million in revenue from the sale of crypto mining equipment. However, the company fell short on earnings, and crypto sales only amounted to around 18 percent of that prediction.
This lawsuit says Nvidia failed to fully inform investors of these specifics, exposing them to unknown risks. Plaintiffs also contend former Nvidia executives and a Royal Bank of Canada report allege that Nvidia understated $1.35 billion in crypto mining revenue. With the reinstatement of the case, the DOJ and SEC support claims for violation of valid securities law.
Growing Legal Support for Nvidia Class Action Suit
Since Oct. 2, other legal and financial entities have added their support of the plaintiffs, filing six additional amicus briefs. They are institutional investors, legal professors, and the Anti-Fraud Coalition. Also supporting the suit, former SEC officials say that Nvidia’s arguments would impose overly burdensome requirements on plaintiffs: It may take months for internal company documents before any formal discovery.
It also puts more on the line for corporate accountability in high-risk markets like cryptocurrency. But Nvidia says its investors’ claims are based on fabricated data, while the plaintiffs claim their claims are grounded in true sources and evidence.
Nvidia reacted to public scrutiny of the company’s financial and regulatory commitments by decreasing its involvement in the crypto sector. While the company has moved away from its foray into crypto-mining hardware, market volatility has made it hard to predict where money will flow. Nvidia was once a significant player in the crypto mining hardware market before it started sounding more like a company trying to diversify its revenue streams.
The Supreme Court hearing the case on November 13 could establish the legal template for when and how corporations must disclose their work in emerging sectors.
The post Nvidia Faces Supreme Court Battle As DOJ SEC Back Crypto Sales Case appeared first on Crypto News Land.