SEC and DOJ support Nvidia investors’ lawsuit over alleged misrepresentation of cryptocurrency sales

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The US Department of Justice and the Securities and Exchange Commission have expressed support for relaunching a class action lawsuit against Nvidia over alleged misrepresentation of sales related to cryptocurrencies.

In an Oct. 2 amicus brief to the Supreme Court, U.S. Attorney General Elizabeth Prelogar and SEC Senior Counsel Theodore Weiman argued that the investor class had provided “sufficient detail” to survive a district court’s earlier dismissal of the case. The agencies recommended that the Supreme Court allow the appeals court decision reviving the trial to stand.

The DOJ and SEC said they have a “strong interest” in the case because it involves laws meant to limit frivolous securities lawsuits. They emphasized that “meritorious private actions are an essential supplement to the agencies’ criminal prosecutions and civil enforcement actions.”

The class action, originally filed in 2018, alleges that Nvidia hid more than $1 billion in GPU sales to cryptocurrency miners. Investors claim that CEO Jensen Huang downplayed Nvidia’s exposure to the crypto industry, arguing that sales were artificially inflated by mining demand and crashed alongside crypto prices in 2018. Although initially dismissed, the Ninth Circuit Court of Appeals The circuit revived the case in August 2023, prompting Nvidia to file a petition. Supreme court.

While Nvidia claims the lawsuit is based on fabricated information by experts, the DOJ and SEC dispute that claim. The agencies acknowledged investor evidence, including former executive accounts and a Bank of Canada report suggesting Nvidia understated crypto revenue by $1.35 billion. Twelve former SEC officials also filed a brief in support of the investors, arguing that “private enforcement of the federal securities laws is vital to the integrity of the U.S. capital markets.”

The case highlights continued scrutiny of tech companies’ disclosures about cryptocurrency-related business activities. A decision by the Supreme Court to allow the lawsuit to proceed could set an important precedent for investor actions related to crypto industry exposure.

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