Nvidia accused of misrepresenting $1bn worth of crypto mining hardware sales
Disgruntled shareholders continue lawsuit against major chipmaker
A group of shareholders continues to accuse the American chipmaker Nvidia (NVDA) of under-reporting its sales of equipment used to mine cryptocurrencies and of passing off the estimated $1bn raised from these transactions as gaming revenue.
Legal proceedings have rumbled on since 2017. However, in an amended suit filed last week in California a number of new allegations were made.
The group of shareholders claim that the “Defendants [CEO Jensen Huang and CFO Collette Kress] refused to publicly acknowledge that Nvidia’s proliferating sales were the result of fickle cryptocurrency miners, lest investors discount the company’s stock to reflect the volatility of crypto-related demand.”
The plaintiffs further add that Nvidia senior executives “opted for a strategy that would capitalise on miners’ fervent demand for GeForce GPU [Graphics Processing Unit], while falsely telling investors that the spike in GEForce sales came from gamers, not miners.”
The initial crypto boom of 2017 in which Bitcoin surged to an all-time high of $19,498 helped Nvidia beat its GPU sales targets. However, when the crypto market stabilised in the following year many budding miners ceased operations, sales slumped and the company’s share price plunged by 20 per cent.
The disgruntled shareholders also argue in the latest filing that: "A host of facts support a strong inference that Nvidia and the individual defendants knew or were deliberately reckless in not knowing the true facts concerning the impact of cryptocurrency-related demand on Nvidia’s financial performance when making the misleading statements and omitting the facts.”
To this end, they are now pursuing damages from the company and its executives via a trial by jury for what they describe as a violation of the US Exchange Act .
Nvidia’s share price has surged to an all-time high this month. The veteran chip manufacturer has weathered the Covid-19 storm well, up almost 49 per cent on the year to date.
FURTHER READING: Largest contract chipmaker in the world halts deliveries to Huawei
FURTHER READING: Chinese IPOs to be hit by Nasdaq’s latest rules