US Supreme Court Denies Nvidia Request to Dismiss Cryptocurrency Class Action
Date: 2024-12-12 Author: Gabriel Deangelo Categories: BUSINESS
US company Nvidia has faced a major legal hurdle: the US Supreme Court has rejected its attempt to dismiss a class action lawsuit related to the cryptocurrency industry. The court issued a short, one-line verdict on December 11, without providing a reason for the rejection. The decision reinstated an earlier overturned appeals court ruling, which in August 2022 upheld a lawsuit filed by a group of Nvidia shareholders back in 2018.
The gist of the allegations is that Nvidia knowingly concealed from shareholders a significant volume of sales of graphics cards intended for crypto mining. According to the lawsuit, the company underreported its sales revenue by more than $1 billion, and CEO Jensen Huang downplayed the impact of the cryptocurrency industry on Nvidia’s business. Investors note that in late 2018, amid a cryptocurrency market crash, a sharp decline in graphics card sales caused the company’s stock price to plummet by nearly 30% in just two days.
Nvidia claimed that the lawsuit was based on “data fabrication” by experts who provided false information about the company’s revenue. However, the U.S. Department of Justice and the Securities and Exchange Commission (SEC) supported the plaintiffs, saying that Nvidia’s arguments were untrue. The shareholders’ evidence includes statements from former company executives and a Bank of Canada report indicating that Nvidia underreported its cryptocurrency revenue by $1.35 billion.
Earlier in 2022, Nvidia paid the SEC a $5.5 million fine for failing to disclose the impact of crypto mining on its gaming business. However, the company neither admitted nor denied the commission's findings.
An Nvidia spokesperson said the company was disappointed with the court's decision but was prepared to continue its defense. "Consistent and predictable standards in securities litigation are critical to protecting shareholders and strengthening the economy. Nvidia will continue to uphold these principles," he said.
The case now returns to lower courts, where Nvidia will have to defend its position again. The Supreme Court's decision was the latest step in a protracted dispute that could have long-term implications for both the company and the entire tech sector.
