On May 6, the graphics card maker agreed to pay a $5.5 million fine, following an investigation of the Securities and Exchange Commission (SEC). In 2018, the company deliberately concealed that a significant portion of its GPU sales were related to cryptocurrency mining. The company linked this success to the video game industry, misleading shareholders.
Nvidia shareholders misled
Without denying or confirming the SEC charges, Nvidia agreed to pay the $5.5 million fine to end the lawsuits, reports Reuters. In 2017, cryptocurrency mining boomed, leading to high demand for graphics cards. In its financial report published in 2018, Nvidia, a specialist in the field, clearly indicated the significant success of its GPUs. However, the company concealed the number of components sold to cryptocurrency miners. It attributed these considerable sales to its gaming division.
Revolut is no closer to getting its UK banking license
According to the American regulator, this decision by Nvidia misled investors. The cryptocurrency market is very volatile, making investments risky. At the end of 2018, a cryptocurrency crash vindicated shareholder concerns. This led to the company’s forecast being lowered by $500 million in the fourth quarter of 2018, prompting shareholders to file suit.
“ Nvidia analysts and investors wanted to know what the real impact of cryptocurrency mining was on the company’s revenue. They repeatedly asked officials how big the increase in gaming division revenue was caused by cryptocurrency mining “, explains the SEC. Despite these requests, Nvidia did not link these two sectors in its financial report.
A company in good financial health
The SEC specifies that employees in charge of sales in China had reported this strong demand for graphics cards in connection with mining. The regulator then made the link between the explosion in sales of GPUs and the increase in the gain generated by Ether mining in 2017. At the time, China was the first country in the world for mining of cryptocurrencies. Hence the suspicions of the SEC. Since then, the Chinese government has decided to ban all transactions in digital currency.
In 2020, with the shortage of semiconductors linked to the health crisis, Nvidia had restricted the mining capacities of its graphics cards to favor video game players. It then released a range of GPUs dedicated to cryptocurrencies. The Verge indicates that this has not prevented the brand from continuing to sell gaming cards to minors, making the precious component even rarer. Despite supply problems, the company said it was not worried about its future.
Nvidia doesn’t have to officially admit wrongdoing to drop the lawsuits. It is committed to putting an end to any unlawful breach in the disclosure of information. The Californian company does not have to worry about its finances. In the fourth quarter of 2021, it announced a 53% growth in its turnover compared to 2020. This represents 7.64 billion dollars. The company also expects a very good start to 2022.