Nvidia will pay $5.5 million to settle charges from the United States Securities and Exchange Commission (SEC) that the company’s disclosures regarding the effect of cryptomining on its gaming arm were insufficient.
The SEC order states that Nvidia “failed to disclose… that cryptomining was a significant factor in year-over-year growth in the company’s gaming revenue” during consecutive quarters in its 2018 fiscal year. In Forms-10Q for that year, the SEC charges that Nvidia’s reports of “material growth” in its gaming business were driven in “significant part” by cryptomining but that the company omitted that fact.
The order alleges that during Q2 and Q3 of 2018, “certain crypto asset prices rose, [and] users of NVIDIA’s GPUs were increasingly performing cryptomining.”
According to the Commission, the company’s actions violated parts of the Securities Act of 1933 and provisions in the Securities Exchange Act of 1934.
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” Kristina Littman, chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit, said in a press release. “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”
An Nvidia spokesperson declined to comment to Tom’s Hardware on the matter. According to the SEC, Nvidia agreed to a cease-and-desist order and is paying a $5.5 million fine, but has neither admitted to or denied the SEC’s charges.
That fine is a slap on the wrist for Nvidia, which in 2018 made $9.7 billion in revenue and $3 billion in profit. In 2021, the company made $26 billion in revenue and approximately $9.7 billion in profit.
Nvidia’s GPUs have been in short supply throughout the pandemic due to Covid-related shipping and production issues, high demand for new gaming PCs as people stayed inside, and cryptomining. Of course, it didn’t help that scalpers got in on buying up graphics cards to resell at high prices to cut a profit.
In early 2021, Nvidia converted some Turing silicon to its CMP product line, which features GPUs explicitly designed for cryptomining.
During the last few months, graphics cards from both Nvidia and AMD have been slowly returning to the manufacturer’s suggested retail prices, meaning that increasing numbers of graphics cards are going to people who are putting them in their PCs to play video games.