in ,

Nvidia slammed with $5.5 million for misleading investors about crypto

The US Securities Exchange Commission has fined Nvidia $5.5 million for illegally concealing how many of its graphics cards were bought by miners of cryptocurrencies.

In an order published today, the SEC accused Nvidia of deceiving its investors by simply reporting that its gaming revenue witnessed a huge boost without revealing the increase was tied to the volatility of the crypto market.

However, even though Nvidia has agreed to the fine, it is not admitting to any wrongdoing. But it has agreed to avoid not disclosing such information in the future.

The allegations came from the company’s financial report for 2018. Around that period, Ethereum mining took off as potentially large profits attracted potential miners. This led to an explosion in sales for Nvidia, which reportedly even led to a GPU scarcity. Nvidia doubled down on the new venture by creating a whole new line for crypto mining chips.

However, the SEC contends the unstable nature of crypto trading means Nvidia was taking a massive risk by investing in it. The company failed to “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’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining.”

The risk of crypto investments came to the fore when a crypto bust in 2018 forced Nvidia to reduce its earnings projection by $500 million. This led to a lawsuit by the shareholders. The SEC says the executives of Nvidia were asked about what effect crypto would have on the company’s gaming revenue but got no concrete response.

“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit. “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”

Written by HackerVibes

Fortnite returns to iOS devices through Microsoft’s game streaming service

Whatsapp releases updates, including emoji reactions and increasing group limit