The US Supreme Court has agreed to hear Nvidia Corporation’s appeal to dismiss a securities fraud lawsuit alleging that the company misled investors in regards to its cryptocurrency revenue.
In 2018, a shareholder class action lawsuit was filed against Nvidia and its CEO, Jensen Huang, which was dismissed by a lower court in 2021 and later reheard by the US Ninth Circuit Court of Appeals. The claim was initiated by E. Ohman J. Fonder AB, a Swedish investment management company, seeking unspecified damages for alleged false statements made by Nvidia and certain senior officials regarding cryptocurrency-related sales as a major component of its 2017-2018 revenue.
History of the trial and charges
The claim was filed under the Securities Exchange Act of 1934 in 2018, alleging violations by Nvidia. It is claimed that the company did not accurately disclose what portion of its revenue came from crypto mining, including using graphic processors to solve mathematical problems in mining digital currencies such as Bitcoin (BTC). By withholding this information, investors and analysts were not informed of the serious negative consequences of crypto mining on Nvidia’s business.
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The Southern District Court initially dismissed the case in 2021; however, later that year, the Ninth Circuit Court of Appeals voted 2:1 to allow the case to proceed to trial.
Consequences of the case
By accepting the appeal, the Supreme Court highlighted the potential significant implications for Nvidia from both a legal and financial perspective. In the event of an unfavorable court ruling against the company, Nvidia could face substantial financial penalties and reputational damage. On the other hand, a successful outcome in the legal proceedings would only strengthen their positions.
