Nvidia Fined $5.5M for Hiding Cryptomining Revenue in 2018
The Nvidia Corporation has agreed to pay a penalty of $5.5M for not properly disclosing its revenue from cryptocurrency mining in 2018. The American tech hardware corp received a civil charge for violating the Securities Exchange Act and misleading investors during the 2017-2018 cryptocurrency boom.
Nvidia 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 recent Securities and Exchange Commission (SEC) order stated.
Gaming GPUs Were Used to Mine Crypto
2017 witnessed the unprecedented growth of the crypto market, as the prices of digital coins soared to historic highs. The resulting boom of the cryptocurrency mining industry created excessive demand for high-end GPUs, eventually leading to shortages.
At the time, GPUs were one of the most effective tools for mining digital coins. Their prices reached extreme new highs, and led to Nvidia’s market value almost tripling during the crypto-mining boom. As Bitcoin’s price crashed in 2018, GPU demand slumped accordingly, leading to a decrease in Nvidia’s revenue in the final quarter of 2018.
In consecutive quarters of Nvidia’s 2018 fiscal year, the company reported growth in revenue of its gaming hardware. As later reported by the SEC, Nvidia was aware that the increase in gaming GPU sales was largely caused by cryptocurrency mining hype. Despite this fact, Nvidia failed to disclose these significant earnings, which were associated with the volatile industry, to its customers, as it was required to do.
Investors accused Nvidia of falsely reporting that the demand for GPU came from gamers, not cryptocurrency miners. According to them, Nvidia claimed that the reduced demand from crypto miners would not negatively impact its business. As a result, the decline witnessed in Nvidia’s revenue and stocks in 2018 led investors to record losses, who later launched a class-action lawsuit against the company.
According to the current SEC order, Nvidia misled customers by providing information about its growing gaming business, without also disclosing the fact that other aspects of the company’s business were being driven by demand for digital currencies. Nvidia therefore created the impression “that the company’s gaming business was not significantly affected by cryptomining.”
Nvidia has reportedly agreed to a “cease-and-desist” order, and will pay a $5.5 million fine. The SEC has not provided any further details on the terms by when the penalties will be carried out.
Read more: https://dailycoin.com/nvidia-fined-5-5m-for-hiding-cryptomining-revenue-in-2018/
Text source: DailyCoin.com
