The U.S. Supreme Court has revived a lawsuit against Nvidia, accusing the tech giant of misleading investors about its cryptocurrency-related sales.
At a Glance
- The Supreme Court dismissed Nvidia’s appeal, allowing a shareholder lawsuit to proceed
- Shareholders allege Nvidia hid over $1 billion in GPU sales to crypto miners
- The lawsuit claims Nvidia misled investors about its dependence on the crypto-mining industry
- The Justice Department and SEC support the shareholders’ case
- Nvidia settled with the SEC for $5.5 million in 2022 over inadequate disclosure of crypto mining’s impact
Supreme Court Dismisses Nvidia’s Appeal
In a unanimous decision, the U.S. Supreme Court has dismissed Nvidia’s appeal to throw out a class-action lawsuit, effectively allowing the case to move forward. The lawsuit, initially revived by the Ninth Circuit appeals court, alleges that Nvidia misled investors about the extent of its sales to cryptocurrency miners, which reportedly exceeded $1 billion.
The dismissal, described as “improvidently granted,” reflects the court’s reluctance to delve into the complex technical details of the case. This decision mirrors a similar stance taken in a previous case involving Meta and investor deception, highlighting the Supreme Court’s apparent disinterest in the intricate operations of Big Tech companies.
Allegations of Investor Deception
At the heart of the lawsuit is the claim that Nvidia failed to disclose its heavy reliance on cryptocurrency mining-related sales. Shareholders argue that this lack of transparency led to significant financial repercussions when the crypto market crashed in 2018. The lawsuit contends that Nvidia’s GPU sales were artificially inflated by demand from crypto miners, a fact allegedly concealed from investors.
“The US Supreme Court dismissed an NVIDIA case it previously agreed to hear as ‘improvidently granted’,” Justice Elena Kagan said.
Nvidia, for its part, maintains that the lawsuit is based on fabricated information about its business and income. However, the tech giant’s defense has been complicated by support for the shareholders from both the Justice Department and the Securities and Exchange Commission (SEC).
Regulatory Scrutiny and Past Settlement
The current legal challenge is not Nvidia’s first brush with regulatory scrutiny over its crypto-related disclosures. In 2022, the company settled with the SEC for $5.5 million over allegations of inadequate disclosure regarding the impact of cryptocurrency mining on its gaming business. This settlement, while not an admission of wrongdoing, set a precedent for the company’s transparency obligations.
The Justice Department and SEC’s support for the shareholders’ case cites evidence from former Nvidia executives and a Bank of Canada report, adding weight to the allegations. This backing from federal agencies underscores the seriousness of the claims and the potential implications for corporate transparency in the tech sector.
Implications for Nvidia and the Tech Industry
The Supreme Court’s decision to allow the lawsuit to proceed could have significant financial implications for Nvidia and its investors. More broadly, it sends a clear message to the tech industry about the importance of transparent reporting, especially concerning emerging and volatile markets like cryptocurrency.
As the case moves forward, it will likely set important precedents for how tech companies must disclose their involvement in cryptocurrency-related businesses. The outcome could influence future regulatory approaches and investor relations strategies across the industry, potentially leading to more stringent reporting requirements for companies operating in volatile or emerging tech sectors.
