The US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have backed a class-action lawsuit against Nvidia for allegedly misleading investors.
In court filings, both agencies submitted an amicus brief supporting Nvidia investors who claim the company misrepresented the impact of crypto mining on its revenue in 2017 and 2018.
The DOJ and SEC have urged the Supreme Court to reopen the dismissed case, stating that there is sufficient evidence for it to proceed. Solicitor General Elizabeth Prelogar and SEC senior lawyer Theodore Weiman argued in favor of the investors.
They have also requested a 10-minute oral argument slot when the case is heard before the court in November.
The Lawsuit
Following the Ninth Circuit Court of Appeals’ decision to reinstate the case due to lack of evidence, the lawsuit accuses Nvidia and its CEO, Jensen Huang, of misleading investors about the company’s reliance on crypto mining revenue. Investors claim Nvidia’s leadership downplayed this dependency despite being fully aware of it, leading to a revenue decline post-2018 crypto market crash.
Nvidia has refuted these claims, suggesting that investors relied on inaccurate data. However, investors argue that their information, sourced from credible individuals, points towards securities fraud.
Former Nvidia employees disclosed that Huang was aware of the company’s sales to crypto miners and attended meetings discussing the impact of crypto mining on revenue. The Ninth Circuit panel concluded that Huang intentionally misled investors, potentially leading to liability.
The US authorities acknowledged this and highlighted Huang’s public statements between May 2017 and November 2018 about the influence of crypto mining on NVIDIA’s revenues. They noted that Nvidia agreed to sanctions, including a $5.5 million civil penalty, for breaching federal securities laws.
In light of these developments, the authorities remarked:
“The observed correlation between crypto-mining demand and NVIDIA’s commercial success belie Huang’s prior public statements suggesting that crypto mining was only a ‘small’ part of NVIDIA’s business.”
