Nvidia Fined for Failing to Disclose Crypto Mining's Impact on GPU Business
Nvidia will pay a $5.5 million fine for failing to disclose to investors how the cryptocurrency-mining boom in 2017 impacted its GPU business.
Announced today by the Securities and Exchange Commission, the settlement says Nvidia made “inadequate disclosures” about the effect of cryptocurrency mining during two consecutive quarters in fiscal 2018, which spanned most of 2017 through late January 2018. That’s when Bitcoin’s price skyrocketed from $1,000 to as high as $19,000 before a steady decline in 2018. (It started rebounding in 2020.)
According to the SEC, “the company failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming.”
The cryptocurrency boom led to a wave of customers buying the company’s GPUs to mine the virtual currencies—something Nvidia knew, according to SEC. “Despite this, Nvidia did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance,” the regulator claims.
The other problem is that Nvidia made statements about how the cryptocurrency mining boom affected other parts of its business. This created an impression the company’s gaming GPU division “was not significantly affected by cryptomining,” when in reality it was, the SEC claims.
“Nvidia’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” says Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit.
Nvidia declined to comment on the
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