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US Supreme Court to Hear Nvidia Crypto Mining Revenue Case
The U.S. Supreme Court has agreed to hear an appeal by Nvidia Corporation seeking to dismiss a securities fraud lawsuit alleging that the company misled investors about the extent of its revenue derived from the cryptocurrency industry.
Nvidia’s Appeal to Supreme Court
Nvidia’s appeal was heard by the justices after the 9th U. S. Circuit Court of Appeals reinstanced a class action lawsuit filed by shareholders against Nvidia and its CEO, Jensen Huang.
The legal proceeding was filed by the Swedish investment management company E. Ohman J Fonder AB and asks for an undisclosed amount of money damages.
Nvidia and its top executives, consequently, are accused of issuing false statements in 2017 and 2018 regarding the significance of cryptocurrency-related sales in the company’s revenue.
Lawsuit History and Allegations
The case was launched back in 2018 with the main allegation of Nvidia violating the Securities Exchange Act of 1934. The plaintiffs alleged that Nvidia did not provide accurate information about the percentage of its revenue that came from cryptomining, a process that involves the use of GPUs to solve mathematical problems in the mining of digital currencies such as Bitcoin.
This alleged omission concealed the fact that cryptomining had a negative and significant effect on Nvidia’s business from investors and analysts.
The lower court had however rejected the case in 2021, but the 9th Circuit in a 2-1 decision decided in the latter half of 2021 that the lawsuit can go forward, because the plaintiffs plausibly alleged that Nvidia made “false or misleading statements knowingly or recklessly. “
Previous Settlements and Ongoing Litigation
Nvidia has posited that the 9th Circuit’s decision can result in “abusive and speculative litigation”, this is why the company has called on the Supreme Court to get involved. In the year 2022, Nvidia was charged by the U.S. authorities, and the company resolved to pay $5. 5 million for not adequately disclosing the effect of cryptomining on its gaming unit. This settlement however did not stop the shareholder lawsuit from continuing to the next level.
In addition, the justices have also consented to hear another such case concerning Meta Platforms Inc. where the shareholders of the social media company have alleged that the company misled the investors about the abuse of users’ data.
Earlier this month, US regulators opened an investigation into Nvidia alongside Microsoft and OpenAI on possible antitrust issues in the AI market. These probes that are in progress are led by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) and are directed towards handling cases of market power and competition.
Read Also: Top US SEC Executive Quits After 9 Years Of Service
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