Nvidia Hit with Class-Action Lawsuit Over Crypto Miner Sales After Supreme Court Denies Appeal

Nvidia is facing a class-action lawsuit over Nvidia crypto miners’ mining rigs, alleging that it misled investors about the volume of sales.

This follows the U.S. Supreme Court’s decision on December 11 to dismiss the company’s appeal, effectively reinstating a lawsuit that was previously dismissed by a California district court in 2021.

The Supreme Court’s one-line order confirmed the Ninth Circuit’s ruling from August 2023, which revived the 2018 lawsuit filed by Nvidia shareholders.

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Nvidia Allegedly Hid $1 Billion in GPU Sales Made to Crypto Miners

The shareholders claim that Nvidia hid over $1 billion in GPU sales made to crypto miners and that CEO Jensen Huang downplayed the scale of these sales.

The lawsuit centers on the allegation that Nvidia’s GPU sales were artificially inflated due to crypto mining demand, particularly during a boom in 2017 and 2018.

The sales reportedly collapsed alongside the downturn in the cryptocurrency market in late 2018, causing Nvidia’s share price to drop by nearly 30% over two days.

Nvidia has denied the claims, arguing that the lawsuit is based on fabricated information.

⚖️💻 U.S. Supreme Court Declines Nvidia Securities Fraud Case

Tickers of interest: $NVDA

The U.S. Supreme Court dismissed Nvidia's appeal in a 2018 securities fraud lawsuit, leaving in place a lower court ruling that allows shareholders to proceed with their claims.… pic.twitter.com/ULMf7ndGPW

— PiQ (@PiQSuite) December 11, 2024

In support of the plaintiffs, the U.S. Department of Justice and the Securities and Exchange Commission (SEC) provided evidence, including statements from former Nvidia executives and a Bank of Canada report.

The SEC and DOJ said that Nvidia’s argument did not align with the facts of the case.

The legal battle follows a 2022 settlement in which Nvidia paid $5.5 million to the SEC over charges of inadequate disclosure regarding the impact of crypto mining on its gaming business. However, it did not admit to any wrongdoing.

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Advocacy Group Supports Nvidia

In August, advocacy group The Digital Chamber (TDC), previously known as The Chamber of Digital Commerce, filed an amicus brief supporting Nvidia’s request for the Supreme Court to overturn a lower court’s decision.

At the time, TDC, whose members include industry crypto heavyweights such as Crypto.com, Ripple, and Binance, argued that the case failed to meet the standards set by the Private Securities Litigation Reform Act of 1995 (PSLRA) designed to protect emerging technologies.

The group cautioned that if the plaintiffs win, it could set a precedent for speculative and unsupported claims to succeed in court. This could lead to many lawsuits against crypto companies, burdening them with costly litigation and discouraging investment.

“Ultimately, this would slow the growth of blockchain technology and undermine the protections the PSLRA was designed to provide for emerging, high-tech industries,” the group warned.

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