US SEC and DOJ Backs Nvidia Investor Lawsuit on Crypto Sales Misrepresentation

Everyday brings a new challenge in the crypto industry, be it lawsuits, scams, or online thefts. A class-action lawsuit that was dismissed due to insufficient evidence in 2021 has resurfaced recently, with the US agencies claiming they have enough evidence.

The US Securities and Exchanges Commission (SEC) and the Department of Justice (DOJ) have even submitted an amicus brief backing all the Nvidia investors who believe that the company and its CEO misled them on crypto mining revenue.

The Class-Action Lawsuit Against Nvidia

Originally, the lawsuit was filed in 2018 by Nvidia investors claiming that the company kept “over $1 billion in GPU sales to crypto miners” in the dark. They further alleged that the CEO of Nvidia, Jensen Huang, downplayed the company's exposure to the crypto industry. This caused a huge misrepresentation regarding the impact of crypto mining sales on the firm’s 2017/2018 revenue.

Nvidia opposed saying investors are making false claims based on fabricated data about its revenue. However, investors who filed the lawsuit believe that their data is gathered from multiple reliable sources and it indicates securities fraud.

The fact that there are two former Nvidia employees among these reliable sources is noteworthy. They revealed that the CEO Huang was aware of the firm’s sales tracking to crypto miners and Huang even attended meetings where the crypto-related revenue discussions took place.

US SEC and DOJ Revived the Lawsuit

The lawsuit was dismissed by the Supreme Court in 2021 due to insufficient evidence. However, the dismissal was overturned and the Ninth Circuit appeals court revived the case in 2023. Solicitor General Elizabeth Prelogar and a senior lawyer in the SEC, Theodore Weiman argued that there is enough evidence to prove Nvidia investors’ allegations are true.

Both the US SEC and the DOJ submitted an amicus brief to the Supreme Court with proofs that include former executive accounts and a bank statement of a Bank of Canada account. This evidence suggests Nvidia concealed its crypto revenue worth $1.35 billion. With proper evidence, the lawsuit is about to take a new turn this time. A few of the former SEC officials also supported investors stating, “private enforcement of the federal securities laws is vital to the integrity of US capital markets.”

Botsfolio’s Take:

Senior officials at Botsfolio opine that, “The revival of the lawsuit against Nvidia underlines the importance of tech companies’ revenue transparency to its investors, especially in the crypto industry as it is in the early stages of development. In case, the Supreme Court makes a decision to allow the lawsuit to proceed, it would act like an indisputable precedent for any tech company’s revenue disclosures regarding crypto businesses to its investors.”