According to Cointelegraph, Nvidia is set to confront a class-action lawsuit alleging it misled investors regarding the extent of its sales to cryptocurrency miners. This development follows the United States Supreme Court's decision to dismiss Nvidia's appeal to have the case thrown out.
The Supreme Court issued a brief order on December 11, dismissing Nvidia's appeal without providing an explanation. This decision reinstates an appellate court's ruling that revived the lawsuit, which a California district court had initially dismissed in March 2021. Nvidia had sought to overturn the Ninth Circuit appeals court's decision from August, which revived a 2018 lawsuit filed by a group of Nvidia shareholders. The shareholders claimed that the company concealed over $1 billion in GPU sales to crypto miners and that CEO Jensen Huang downplayed the significance of these sales to the industry.
An Nvidia spokesperson expressed disappointment over the Supreme Court's decision, 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." The spokesperson emphasized the importance of consistent and predictable standards in securities litigation to protect shareholders and maintain a strong economy.
The lawsuit alleges that Nvidia's GPU sales were significantly bolstered by sales to crypto miners, a situation that became apparent when sales plummeted alongside the declining crypto market in late 2018. This downturn led to a nearly 30% drop in Nvidia's share price over two days. Nvidia contended that the lawsuit relied on an expert opinion that fabricated information about its business and income. However, in October, the class group received support from the Justice Department and the Securities and Exchange Commission, which argued that Nvidia's claims were unfounded.
The agencies highlighted evidence in the investors' case, including statements from former Nvidia executives and a report from the Bank of Canada, which suggested that Nvidia understated its crypto revenue by $1.35 billion. The Supreme Court's dismissal follows its hearing of arguments on November 13, during which some justices questioned the necessity of the court's involvement in the case.
In 2022, Nvidia agreed to pay $5.5 million to the SEC to settle charges related to inadequate disclosure of the impact of crypto mining on its gaming business, without admitting or denying the agency's findings.