US Supreme Court to review Nvidia’s appeal in crypto mining lawsuit
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The US Supreme Court has agreed to hear a bid by Nvidia, the artificial intelligence chipmaker, to dismiss a securities fraud lawsuit accusing the company of misleading investors about the extent of its sales to the crypto industry.
The lawsuit is led by the Stockholm-based investment management firm E. Ohman J:or Fonder AB and seeks unspecified monetary damages.
Plaintiffs allege that Nvidia and its executives violated the Securities Exchange Act of 1934 by making statements in 2017 and 2018 that falsely downplayed the impact of crypto-related purchases on Nvidia’s revenue growth. They argue that these omissions misled investors and analysts who keen on understanding the extent of influence that cryptomining had on Nvidia’s overall business.
US District Judge Haywood Gilliam Jr. initially dismissed the lawsuit in 2021, but the San Francisco-based 9th US Circuit Court of Appeals subsequently revived it in a 2-1 ruling. The 9th Circuit found that the plaintiffs had adequately alleged that Huang made “false or misleading statements and did so knowingly or recklessly,” allowing their case to proceed.
Nvidia urged the Supreme Court to take up its appeal, arguing that the 9th Circuit’s ruling would open the door to “abusive and speculative litigation.” The Supreme Court will hear the Nvidia case for its next term on October.
In 2018, Nvidia’s chips gained popularity for cryptomining, a process that involves solving complex mathematical equations to secure crypto protocols that relied on proof of work consensus algorithms like Bitcoin. In 2021, Nvidia launched CMP 70HX, a graphics card built on an 8 nanometer process and designed specifically for the purpose of mining crypto.
At the time, Nvidia was facing criticism from GPU buyers, in particular gamers and video professionals who needed high-powered GPUs, for having its products sold more to crypto miners. In 2022, the company agreed to pay $5.5 million to US authorities to settle charges in relation to its improper disclosure on the impact of cryptomining to the gaming industry.
Back to the present, the company’s market value has surged, largely due to its position as a major beneficiary of the AI boom. Crypto Briefing recently reported that AI crypto tokens showed correlative gains after Nvidia reported $26 billion for its Q1 revenue this year.
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