NVIDIA Faces Class Action Over Crypto Mining Revenue

NVIDIA Lawsuit | Source: Court Order

As the company failed to prove that its statements about crypto mining revenue didnt affect its stock price, the federal judge approved the lawsuit on Wednesday. Judge Haywood S. Gilliam Jr. in California issued an order allowing investors who first sued Nvidia in 2018 to proceed as a single class.

Notably, the lawsuit dates back to 2018. The investors then alleged that the company concealed more than $1 billion in GPU sales linked to crypto mining. They also argued that the CEO downplayed the size of this demand.

In 2022, the SEC fined Nvidia $5.5 million for failing to disclose how crypto mining affected its business. The case underscores ongoing scrutiny over how major tech companies disclose revenue sources tied to volatile markets like cryptocurrency.

As per the court order, one of Nvidia‘s executives admitted that the company’s earlier statements might have helped keep its stock price high. Judge Gilliam Jr. noted that, given this evidence, the court cannot say that these statements had no effect on the stock price.

In other words, statements about crypto-related sales likely influenced investor decisions and Nvidias share price.

Investors Challenge Nvidias Crypto Claims

In response to investors claims and the SECs action, Nvidia stated that crypto mining accounted for only a small part of its business. The company added that it kept most of those sales separate from its main gaming division. It also claimed it could manage its supply chain and handle extra graphics card inventory without problems.

However, investors argue that a large portion of crypto-related revenue came from Nvidias GeForce gaming GPUs. They added that the company recorded it in its gaming segment.

They argue that this made the company vulnerable to fluctuations in the crypto market. The court also pointed to an internal email from an Nvidia vice president, considering it especially revealing.

What Does This Lawsuit Mean for Nvidia？

Notably, this class-action lawsuit could have major consequences for Nvidia, both financially and reputationally. If the investors win against the platform, Nvidia could face significant payouts. It could also shake the confidence in how Nvidia reports its revenue from crypto mining and other similar activities.

Beyond the financial impact, the case highlights increased scrutiny of how tech giants disclose revenue sources linked to crypto. It serves as a reminder to investors that even a small portion of business tied to crypto can influence stock prices and shareholder trust.