GPU maker NVIDIA settles with the SEC over crypto mining disclosure issues
May 6, 2022, 9:56AM EDT
2 min read
Computing hardware maker NVIDIA has settled with the Securities and Exchange Commission (SEC) for $5.5 million over alleged "inadequate disclosures concerning the impact of cryptomining on the company’s gaming business."
The SEC announced the news today, saying that its order found that the company failed to disclose mining as a significant element of its revenue growth. During consecutive quarters in fiscal year 2018, the company did not disclose that crypto mining was a main driver of the sale of its graphics processing units (GPUs), according to the SEC.
Those GPUs were marketed and designed for gaming, but amid 2017's bull run, many began purchasing high-end GPUs to mine crypto. As Mark D’Aria, CEO of Bitpro Consulting, a retailer of used GPUs, told The Block in a recent look at GPU price trends:
“There was a much bigger demand for these super high-end GPUs that gamers never really were willing to pay on average that much for,” he said. “Because miners were willing to pay whatever it cost, Nvidia sold far more 3090s than they would have sold to just gamers (...) there was this massive amount of volume of the really high-end cards.”
The SEC contends that NVIDIA was responsible for disclosing that driver of growth in its Forms 10-Q, which is a quarterly report of financial performance. According to the SEC, NVIDIA knew crypto mining was driving its growth, but left this detail out of two of its 2018 10-Qs. It also referenced how other parts of the company's business were driven by crypto demand, which the SEC contends further obscured the link to crypto mining omitted in the GPU sales section.
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit in a statement.
NVIDIA agreed to pay the $5.5 million fine without admitting or denying the findings.
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