NVIDIA Corporation will pay a $5.5 million fine in exchange for dropping charges from the US Securities and Exchange Commission (SEC) that it does not properly disclose data on the impact of cryptocurrency mining on the sale of its chips intended for computer games.
David Paul Morris/Bloomberg News
The chipmaker is accused of failing to inform the SEC regarding the “significant” role of cryptocurrency mining in its GPU revenue growth during fiscal year 2018. NVIDIA kept investors in the dark regarding this fact for two quarters, depriving shareholders of the information they need to understand its future financial performance, the SEC said.
According to the regulator, NVIDIA violated both the US Securities Act and the US Securities Trading Act when it did not disclose that its success was due to “unstable business.” In fact, NVIDIA has been misrepresenting the surge in sales as increased demand from gamers. This might be misleading to investors, who would think it was the result of the firm’s usual gaming-focused strategy.
“NVIDIA’s failure to disclose information has deprived investors of critical information to evaluate the company’s business in a key market,” — said Christina Littman (Kristina Littman), head of the SEC division for crypto assets and cybersecurity.
The end of the mining boom in early 2018 led to NVIDIA lowering its quarterly revenue forecast by $0.5 billion and filing a lawsuit by investors. By paying a $5.5 million fine, NVIDIA will settle the SEC charges without admitting or denying its claims. Now NVIDIA separates the sale of gaming and mining accelerators. Accelerators of the CMP series are produced for the extraction of cryptocurrencies, and mining performance in gaming GPUs is artificially reduced.
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