Nvidia to pay $5.5M as part of SEC case concerning ‘inadequate disclosures’ around crypto mining



The United States Securities and Exchange Commission, or SEC, announced that it has settled charges against Nvidia, the company behind the graphics cards used by many crypto miners, regarding “improper disclosures.”

In a Friday announcement, the SEC said Nvidia failed to disclose that cryptocurrency mining was “a significant element of its material revenue growth” based on sales of its graphics processing units, or GPUs, during fiscal 2018. The company has agreed to pay a $5.5 million fine and will be subject to a cease and desist order based on violations of the Securities Act of 1933 and disclosures required by the Securities Exchange Act of 1934.

According to the SEC, Nvidia reported revenue growth around its gaming business in 2018, but also had information attributing this increase to crypto mining. The company was required to report the connection “related to a volatile business” and by not doing so, it was misleading investors by not disclosing the crypto mining demand.

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

The action by the SEC’s crypto enforcement unit was the first since the government agency announced plans to expand its Cyber ​​Unit, which includes the Crypto Assets Enforcement Division, by 20 people in an effort to improve “policing of irregularities in the crypto markets”. The SEC reported in January that, between 2013 and the end of 2021, it brought 97 enforcement actions against digital asset market participants, costing them approximately $2.35 billion in fines.

Related: Crypto Firms May Still Face SEC Penalties for Violations of Self-Reporting Securities Laws: Report

Although Nvidia has agreed to pay fines and face enforcement actions in this case from the SEC, the company has previously succeeded in similar accusations in civil court. In March 2021, a federal judge granted Nvidia’s legal team’s request to dismiss a lawsuit that alleged the GPU maker had acted with “conscious recklessness” by not disclosing a significant amount of 2017 and 2018 revenue from sales. of crypto miners.