Nvidia will pay $ 5.5 million to settle allegations that it concealed how many of its graphics cards were sold to cryptocurrency miners. The U.S. Securities and Exchange Commission announced the charges and settlement with the company today.
The report claims that Nvidia has deceived investors by reporting a massive increase in revenue related to the gaming market, hiding how much its success relies on a far more volatile crypto market. Nvidia does not acknowledge wrongdoing as part of the settlement but agrees to stop any illegal omissions in disclosing information.
The allegations stem from Nvidia’s financial statements for the fiscal year 2018. The SEC notes that Nvidia experienced an explosion in sales related to cryptocurrency mining in 2017 when Ethereum’s mining commissions rose dramatically. Crypto mining has been widely reported as the cause of GPU shortages, and Nvidia has launched a separate CMP line specifically for mining, trying to prevent GPU shortages for players.
Given the nature of the cryptocurrency (rapid growth and declining value), Nvidia’s sales numbers did not necessarily indicate reliable future growth, making investing in it riskier. The SEC says NVIDIA analysts and investors have repeatedly asked for information on which part of the graphics card goes to the miners and the gaming industry.
Despite this, Nvidia did not mention mining-related sales as a factor in the success of its gaming department.
The fall in cryptocurrency in late 2018 (along with the weakening of the Chinese market) led to a $ 500 million revenue decline and sparked a shareholder lawsuit.
SEC Assets and Cyber Unit chief Kristina Littman commented on the settlement, saying NVIDIA had lied to depriving investors of critical information to assess the company’s business in a key market and must provide timely and accurate information on the future business to prevent such things from happening again.
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