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.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

The State of LSTFi

Research

There are five broad use cases for LSTs that are gaining traction alongside growth in demand: leverage farming, liquidity providing, LST baskets, stablecoin collateral, and interest rate derivatives.

/

article-image

Over 130 family office professionals surveyed noted a 90% client interest in crypto, a finding at odds with Goldman Sachs earlier this month

article-image

Newly announced Republican presidential hopeful Ron DeSantis claimed that the crypto industry would be doomed if President Biden is reelected

article-image

The 7-day average trading volumes for bitcoin have dropped to their lowest level in two and a half years alongside a muted derivatives market

article-image

Alexander Vinnik’s lawyers aim to swap his freedom for detained WSJ reporter Evan Gershkovich

article-image

This latest update will introduce immutability to token metadata but ensure that its key characteristics are preserved, and it will also introduce network fees

article-image

In a blog post, partly directed at the forthcoming Eigenlayer protocol, the Ethereum co-founder cautions against overloading consensus