Nvidia To Pay SEC $5.5M for Allegedly Failing to Disclose Crypto Revenue Boost

Nvidia misled investors when it failed to communicate crypto mining’s key role in its gaming business throughout 2018, according to the SEC

article-image

Source: Shutterstock

share

key takeaways

  • It’s one of the biggest penalties to date imposed by the SEC on a gaming company
  • The gaming giant did not admit or deny guilt as a condition of the settlement

Gaming giant Nvidia will pay the SEC $5.5 million for allegedly failing to properly disclose cryptocurrency mining’s impact on its revenue.

The SEC found Nvidia hadn’t communicated that cryptocurrency mining was a “significant element of its material revenue growth” throughout 2018.

The Santa Clara company’s processors were designed and marketed for gaming, but customers found they were also efficient at generating new cryptocurrency, particularly ethereum.

In particular, the SEC highlighted two Nvidia disclosures from 2018 which reported “material” revenue growth in its gaming business, even though Nvidia knew that growth was significantly driven by crypto mining.

“Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance,” the SEC said in a press release.

Regulators considered the alleged omission misleading, as Nvidia had already disclosed the extent at which other parts of its business were boosted by crypto demand. The US securities watchdog said it created the impression that Nvidia’s gaming sector was not significantly affected by cryptocurrency mining.

Nvidia stock almost doubled between September 2017 and September 2018, a heady period for crypto markets powered by bitcoin’s first-ever surge to $20,000.

The company’s chipsets remain popular among miners, much to the dismay of gamers. Nvidia has even introduced so-called hash rate limiters on its newer models in a bid to curb high prices and low supply worldwide.

“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, who runs the SEC Enforcement Division’s Crypto Assets and Cyber Unit.

Nvidia settled without admitting or denying the allegations. The firm’s share price fell around 4% during intraday trading on Friday after news of the settlement broke.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

Plus, Sotheby’s auctions an EtherRock and telecom giants get in on Web3

article-image

Elsewhere, Cowen’s crypto employees moved to StoneX and Nomura’s crypto custody firm CEO stepped down

article-image

If DeFi can just figure out how to improve both security and compliance, nothing would stop traditional finance from entering the game

article-image

Earnings from Coinbase and Robinhood boosted stock prices, while bitcoin’s open interest hits highs not seen since 2021, 2022

article-image

Ethereum Dencun will enable Ethereum transactions to be submitted as blobs, potentially alleviating the costs of posting data on the blockchain

article-image

After a rocky start, bitcoin ETF shareholders are now well in the green