The United States’ top court allowing a revived legal spat between chip maker Nvidia and a class group of its investors to go ahead could put the crypto industry at risk by opening it to a wave of “frivolous securities lawsuits,” an industry advocacy group claims.
In an Aug. 20 amicus brief, The Digital Chamber (TDC), formerly The Chamber of Digital Commerce, backed Nvidia’s bid for the US Supreme Court to reverse an appellate court’s decision from last August, which revived a suit claiming Nvidia downplayed the amount of GPU’s it sold to crypto miners.
The chamber’s founder and CEO, Perianne Boring, said that they “felt compelled to weigh in due to the grave risks of a potential increase in frivolous securities lawsuits based on nothing more than unfounded negative perceptions about the cryptocurrency industry and its high-growth business cycle.”
In its brief, TDC claims the class suit against Nvidia used an expert opinion that relied on “unsupported assumptions and inferences” about the crypto industry and Nvidia’s sales.
It claimed the plaintiffs didn’t “identify a specific document, presentation, testimony, or any internal material” supporting their claims.
“There is nothing to stop other plaintiffs from hiring other experts to do the same thing,” it claimed. “The impact will be felt the greatest by the most cutting-edge companies, like many in the cryptocurrency industry.”
TDC’s members include industry crypto heavyweights such as Crypto.com, Ripple and Binance.
The lawsuit, filed in 2018, alleged Nvidia hid over $1 billion in GPU sales made to crypto miners, and its CEO, Jensen Huang, publicly downplayed that Nvidia was selling a large number of its products to the sector.
The suit claimed it later became apparent that sales were propped up by miners after the crypto market and Nvidia’s financial results dropped in tandem.
Source: The Digital Chamber
TDC argued that the case undermines and doesn’t meet the standards set out in the Private Securities Litigation Reform Act of 1995 (PSLRA), which aims to protect “critical, emerging technologies.”
Under the act, a lawsuit must clearly identify each allegedly misleading statement, explain why it is misleading and give facts supporting the claim, which the group claims the class suit has not done.
“If the plaintiffs win, it will set a dangerous precedent, allowing speculative and unsupported claims to succeed in court,” the Chamber said in its statement.
It added a possible flood of lawsuits against crypto companies would stifle innovation by “burdening them with costly litigation and discouraging investment.”
“Ultimately, this would slow the growth of blockchain technology and undermine the very protections that the PSLRA was designed to provide for emerging, high-tech industries,” the group said.
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