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Nvidia Disguised $1B in 'Fickle' Crypto Mining Sales as Gaming Revenue, Lawsuit Claims
An amended lawsuit accuses the chip maker of concealing $1 billion in graphics processing unit sales to crypto miners to downplay risk to long-term profits.
Nvidia, the multinational chip-making giant, is still being sued by disgruntled investors for allegedly under-reporting its sales of hardware used to mine cryptocurrency.
STORY CONTINUES BELOW
According to The Register, the computer processing giant stands accused by a group of shareholders of attempting to pass off the sales of as much as $1 billion in graphics processing units (GPUs) used for cryptocurrency mining as gaming hardware.
The shareholder class suit accuses CEO Jensen Huang, CFO Collette Kress and Jeff Fisher, senior vice president and head of gaming, claiming they knew the spike in GeForce GPU sales was related to the crypto mining boom and could not be sustained over the long term.
The lawsuit dates back to the height of the crypto fervor in 2017, but an amended suit was filed in California last week (see below).
The joint plaintiffs claim the "defendants opted for a strategy that would capitalize on miners’ fervent demand for GeForce GPUs while falsely telling investors that the spike in GeForce sales came from gamers, not miners." They then allege the company made it appear its revenue was sheltered from the ups and downs of the cryptocurrency markets.
"Defendants refused to publicly acknowledge that NVIDIA’s proliferating sales were the result of fickle cryptocurrency miners, lest investors discount the Company’s stock to reflect the volatility of crypto-related demand," the filing states.
See also: Nvidia Reports ‘Substantial Decline’ in GPU Sales to Crypto Miners
In 2018, Nvidia's share price plummeted 20 percent after demand tapered from the mining craze the year before. As cryptocurrency prices dropped significantly, so, too, did miner profits, forcing many operations to close down.
Via a trial by jury, the shareholders now seek damages from the company and its executives for what they claim is a violation of U.S. Exchange Act for misrepresenting where Nvidia's revenues were coming from.
See the full amended complaint below:
Sebastian Sinclair
Sebastian Sinclair is the market and news reporter for CoinDesk operating in the South East Asia timezone. He has experience trading in the cryptocurrency markets, providing technical analysis and covering news developments affecting the movements on bitcoin and the industry as a whole. He currently holds no cryptocurrencies.
