Nvidia Pays $5.5M in SEC Case Over “Inadequate Disclosures” in Crypto Mining

Fry Electronics TeamMay 8, 2022
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The United States Securities and Exchange Commission, or SEC, has announced that it has settled charges against Nvidia — the company behind graphics cards used by many crypto miners — regarding “inadequate disclosures.”

In an announcement Friday, the SEC said that Nvidia failed to disclose that cryptocurrency mining was “a significant element of its significant revenue growth” based on sales of its graphics processors, or GPUs, in fiscal 2018. The company has agreed to a $5.5 million in penalties and an injunction for violations of the Securities Act of 1933 and disclosures made under the Securities Exchange Act of 1934.

According to the SEC, Nvidia reported revenue growth around its gaming business in 2018, but also had information attributing that growth to crypto mining. The company had to report the connection “in connection with a volatile business,” and by not doing so, it misled investors by not disclosing demand for crypto mining.

“NVIDIA’s disclosure failures have deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, head of the SEC’s Enforcement Division’s Crypto Assets and Cyber ​​Unit. “All issuers, including those pursuing opportunities related to emerging technologies, must ensure that their disclosures are timely, complete and accurate.”

The action by the SEC’s crypto enforcement unit was the first since the government agency announced it would add 20 people to its cyber unit – which includes the Crypto Assets Enforcement Division – to “better monitor wrongdoing in the crypto markets.” The SEC reported in January that it filed 97 enforcement actions against participants in the digital asset market between 2013 and the end of 2021, costing them approximately $2.35 billion in penalties.

Related: Crypto Firms Can Still Face SEC Penalties for Self-Reporting Securities Law Violations: Report

Although Nvidia has agreed to pay penalties and face enforcement action in this SEC case, the company has previously had success with similar allegations in civil courts. In March 2021, a federal judge granted Nvidia’s legal department’s motion to dismiss a lawsuit alleging that the GPU maker acted with “deliberate recklessness” by failing to collect a significant amount of 2017 revenue and 2018 that resulted from sales by crypto miners.