NVIDIA made money from cryptomining and didn’t say it – fined $ 5.5 million by the SEC

The SEC (Securities and Exchange Commission), i.e. the body that supervises the US stock exchange, has fined by NVIDIA for $ 5.5 million. The company headed by Jensen Huang was found guilty fromfailing to adequately communicate the impact of cryptocurrency mining on revenues from the gaming business – closely linked to the sale of GeForce video cards.

The SEC ordinance specifically focuses on quarters of NVIDIA fiscal year 2018 (January 2017 to January 2018), a period in which “the company did not disclose that cryptomining was a significant element of the growth of its material revenues linked to the sale of GPUs designed and marketed for video games”. Recall that a group of investors in 2020 decided to denounce NVIDIA advancing the same accusations over the same time frame. Unfortunately for them, a judge rejected the case.

The phenomenon, as enthusiasts looking for a video card know, has become even more relevant in the last two years. The shortage of GPUs on the shelves was also induced in large part by miners, who have bought in bulk NVIDIA’s powerful GeForce RTX 3000 GPUs to profitably mine cryptocurrencies such as Ethereum and the like.

These purchases created a “vicious circle” of skyrocketing prices and very limited availability of video cards, to the detriment of gamers who wanted to buy a GPU to use it for the primary purpose for which it was created: to play. The miners’ thirst for computing power has undoubtedly benefited the accounts of NVIDIA, which managed not only to sell large quantities of GPUs, but also at higher prices than usual.

The company has always stated that it is difficult for it to estimate exactly how many video cards go to miners and how many to gamers as it markets GPUs, while OEM partners actually market video cards.

We said, the SEC investigation focuses on the 2018 fiscal year and in particular on the filed documentation in which the company reported a significant improvement in turnover in the gaming sector. According to the SEC, NVIDIA knew that “this increase in sales was driven in a significant part by cryptomining.”

NVIDIA would not indicate in filings that cash flow and cash flow fluctuations were related to a volatile activity such as cryptocurrency mining. preventing investors from making a proper examination of the future prospects of the gaming business.

The SEC also found that “NVIDIA’s omissions of material information on the growth of its gaming business were misleading, as NVIDIA releases statements about how other businesses had been driven by demand for cryptocurrencies. creating the impression that the gaming business was not significantly affected by cryptomining“.

“NVIDIA’s miscommunications have deprives investors of critical information to evaluate the company’s activity in a key market“, said Kristina Littman, head of the Crypto Assets and Cyber ​​Unit of the SEC Enforcement Division, recalling that listed companies are required to ensure that their communications are” timely, complete and accurate “.

As a result of the findings, the SEC fined NVIDIA $ 5.5 million. The company has decided to pay without admitting or denying the findings of the SEC, ensuring greater transparency in future market communications.

The amountagainst the proceeds related to cryptomining and the turnover of NVIDIA, decidedly contained and for this reason we do not find it hard to believe that the company has decided to pay it without being hit.