Nvidia fined $5.5 million for insufficient disclosure of information about cryptomining©

 

Over the past few years, Nvidia’s GPU business has expanded at an incredible rate, thanks in large part to the widespread growth of cryptocurrency mining. Where Nvidia primarily builds GPUs for gamers, crypto miners used the same cards and had seemingly endless funds to acquire more. While gamers have certainly acknowledged that the demand for crypto mining for Nvidia GPUs has changed the market, Nvidia has apparently not been as outspoken. The SEC fined Nvidia $5.5 million for insufficient disclosure of information about the growth of the crypto mining business.

In a statement released by the SEC, he confirmed that Nvidia reported “substantial revenue growth in its gaming business” through two official filings for fiscal year 2018. However, after an investigation, the SEC found that this growth in sales of gaming-focused GPUs was not the result of purchases in the gaming industry. Rather, it was driven “in large part” by crypto mining, which the SEC requires companies to disclose in their financial statements.

The need for this reporting, according to the SEC, is important for investors to “establish the likelihood that past performance has been indicative of future performance.” In other words, the message that the growth was solely related to gaming and not due to the highly volatile cryptocurrency market was negligent to Nvidia shareholders. That’s why the SEC requires companies like Nvidia to properly disclose this information.

In addition, the SEC found that Nvidia mistakenly disclosed the real growth of its crypto mining business. The SEC says Nvidia was clearly aware that the growth it attributed to its gaming GPUs was actually driven by the demand for cryptocurrencies. Thus, the SEC contends that Nvidia deliberately misrepresented its financial statements. Nvidia knew where its growth was coming from.

The SEC finds that Nvidia violated sections 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. As a result, Nvidia agreed to a settlement of the charges, pledging to further correct financial disclosures and paying a fine of $5.5 million.

While the SEC investigation and its settlement with Nvidia is unlikely to have a significant impact on how the GPU maker communicates with the public, it could mean more transparency regarding its financial reporting. Unfortunately, this is unlikely to affect whether Nvidia GPUs become more available on store shelves – whether they’re purchased for gaming or crypto mining.

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