The Securities and Exchange Commission revealed that Nvidia agreed to pay a $5.5 million fine after hiding the business impact of cryptocurrencies related to its graphics cards for gamers in 2018.
This ends a long story where even Nvidia investors have denounced the company for manipulating information. The summary is quite simple, at the height of hardware mining, Nvidia said that the big rebound in sales of its GeForce graphics cards, aimed at gamers, was due to the popularity of its product, but really the company had deceived its investors, since this rebound in sales was linked to a market as volatile as that of cryptocurrencies.
As an example, in the second mining wave (the current one which is almost knocked out), at the end of 2020, it was announced that Nvidia Reportedly Made $175M Selling GeForce RTX Graphics to Mining Industry. Now it’s all settled with the agreement to pay that million dollar fine.
The Securities and Exchange Commission (SEC) today announced the settlement of charges against technology company Nvidia Corporation for improperly disclosing the impact of crypto mining on the company’s gaming business.
SEC order finds that for consecutive quarters of Nvidia’s 2018 fiscal year, the company failed to disclose that crypto mining was a material part of its hardware revenue growth from GPU sales designed and marketed for gaming. Crypto mining is the process of earning crypto rewards in exchange for verifying crypto transactions against distributed ledgers. As demand and interest in cryptocurrencies increased in 2017, Nvidia customers increasingly used their gaming GPUs for crypto mining.
In two of its Form 10-Qs for its 2018 fiscal year, Nvidia reported significant revenue growth from its gaming business. However, Nvidia had information that this increase in game sales was largely due to crypto mining. Despite this, Nvidia failed to disclose on its Forms 10-Q, as it was required to do, these significant fluctuations in earnings and cash flow related to volatile business so that investors could determine the likelihood that past performance are indicative of future performance. performance.
The SEC order also finds that Nvidia’s omissions of material information about the growth of its gaming business were misleading, given that Nvidia made statements about how other parts of the game’s business company were driven by demand for crypto, giving the impression that the company’s gaming business was not significantly affected by crypto mining.
“Nvidia’s disclosure failures deprived investors of critical information to assess the company’s business in a key market,” said Kristina Littman, head of the Crypto Assets and Cyber Unit at the Nvidia. SEC Enforcement Division. “All issuers, including those seeking opportunities involving emerging technologies, must ensure that their disclosures are timely, complete and accurate.”
The SEC order finds that Nvidia violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. The order also finds that Nvidia did not has not maintained adequate disclosure controls and procedures. Without admitting or denying the SEC’s findings, Nvidia agreed to a cease and desist order and a $5.5 million fine.
The SEC investigation was led by Brent Wilner of the Cyber Assets and Crypto Unit and overseen by Diana Tani and Ms. Littman of the Cyber Assets and Crypto Unit.