Bitrabo Editorial
The US government is joining forces in a class-action lawsuit against Nvidia Corporation, a leading manufacturer of graphics processing units. The Department of Justice and the Securities and Exchange Commission are pushing the Supreme Court to reconsider a case that alleges Nvidia misled its investors regarding income generated from cryptocurrency mining. This case has experienced many ups and downs since it was first filed in 2018 and is once again making headlines.
Government Assistance for Investors
In an amicus brief submitted on October 2, Solicitor General Elizabeth Prelogar and SEC attorney Theodore Weiman asserted that the facts presented are strong enough to revive the case. They contended that Nvidia’s CEO Jensen Huang downplayed the company’s reliance on cryptocurrency earnings during a peak period for those sales.
The brief emphasizes that private lawsuits are vital for effective securities enforcement, indicating the government has a significant interest in the case. The Supreme Court is scheduled to conduct oral hearings in November.
In 2021, the Ninth Circuit Court of Appeals dismissed this case due to a lack of evidence; however, it was reinstated last August after further examination. Investor plaintiffs argue that Nvidia misrepresented its reliance on cryptocurrency revenue prior to the 2018 crypto market crash. According to them, Huang’s public statements were misleading and have led to accusations of securities fraud.
Claims Against Nvidia
The lawsuit alleges that Nvidia misrepresented its financial stability and misled investors about the extent of its cryptocurrency revenue streams in the open market.
Investors assert that this lack of transparency became evident when the company’s income dropped following the cryptocurrency crash in 2018. They argue that Huang was well aware of his company’s reliance on crypto sales but chose to publicly minimize that information.
Nvidia, on the other hand, defends itself by claiming that the investors’ assertions are based on false information regarding how the company generates revenue. However, evidence from former employees has suggested that Huang participated in discussions about the impact of crypto mining on sales. The Third Circuit accepted this testimony, indicating that Huang had knowledge of the alleged fraud affecting investors.
Legal Consequences and Next Steps
The involvement of the DOJ and SEC strengthens the investors’ claims. They argue that accepting an expert’s opinion as sufficient evidence for demonstrating dishonesty or intent could undermine protections for investors as established under the Private Securities Litigation Reform Act (PSLRA). To affirm their commitment to enforcing securities laws, these agencies have requested 10 minutes for oral arguments during the upcoming Supreme Court hearing.
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