The United States Supreme Court dealt a significant blow to Nvidia on Dec. 11, dismissing the tech giant’s appeal to throw out a class-action lawsuit accusing it of misleading investors about its sales to cryptocurrency miners. With this decision, the Supreme Court effectively upheld a Ninth Circuit appellate ruling from August, which had revived the lawsuit initially dismissed in 2021 by a California district court.
The class-action suit, brought forth by a group of Nvidia shareholders, alleges the company concealed over $1 billion in GPU sales tied to crypto mining during the market boom leading up to 2018.
Investors claim that CEO Jensen Huang and the company downplayed the extent of sales to the cryptocurrency sector, a critical omission that came to light when the market collapsed later that year, causing Nvidia’s stock to plummet nearly 30% over two days.
Nvidia had sought the Supreme Court’s intervention, arguing that the lawsuit relied on fabricated data and unsupported claims. However, the court dismissed the appeal in a one-line order without offering further explanation.
Regulators and Evidence Bolster Shareholder Claims
Adding weight to the shareholders’ case, the Justice Department and the Securities and Exchange Commission (SEC) backed the class-action group in October. The agencies pointed to evidence, including statements from former Nvidia executives and a Bank of Canada report suggesting that Nvidia understated its cryptocurrency-related revenue by $1.35 billion.
In response to the Supreme Court decision, an Nvidia spokesperson expressed disappointment, stating, “We would have preferred a decision on the merits affirming the trial court’s dismissal of the case, but we are fully prepared to continue our defense.”
Nvidia emphasized its commitment to maintaining consistent standards in securities litigation, which it deems essential for economic stability and shareholder protection.
A History of Regulatory Scrutiny
This lawsuit is not Nvidia’s first brush with crypto-related controversy. In 2022, the company paid $5.5 million to settle SEC charges over its failure to adequately disclose the impact of cryptocurrency mining on its gaming business. Nvidia resolved the matter without admitting or denying the agency’s findings.
The Supreme Court’s dismissal marks a turning point, as Nvidia now faces the prospect of a prolonged legal battle that could scrutinize its internal practices and its handling of the crypto boom.
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