US agencies argue the class action lawsuit has "sufficient details" to proceed in Supreme Court case.
Key Takeaways
- Nvidia's alleged misrepresentation of sales to crypto miners led to a class action lawsuit.
- The DOJ and SEC support the lawsuit's revival, emphasizing the role of private actions in securities regulation.
The US Department of Justice and Securities and Exchange Commission have voiced support for reviving a class action lawsuit against Nvidia over alleged misrepresentation of cryptocurrency-related sales.
In an October 2 amicus brief to the Supreme Court, US Solicitor General Elizabeth Prelogar and SEC senior lawyer Theodore Weiman argued the investor class had provided “sufficient details” to survive a district court’s previous dismissal of the case. The agencies recommended the Supreme Court allow the appeals court decision reviving the lawsuit to stand.
The DOJ and SEC stated they have a “strong interest” in the case as it concerns laws designed to limit frivolous securities lawsuits. They emphasized that “meritorious private actions are an essential supplement to criminal prosecutions and civil enforcement actions” by the agencies.
The class action lawsuit, originally filed in 2018, alleges Nvidia concealed over $1 billion in GPU sales to cryptocurrency miners. Investors claim CEO Jensen Huang downplayed Nvidia’s exposure to the crypto industry, arguing sales were artificially inflated by mining demand and collapsed alongside crypto prices in 2018. Though initially dismissed, the Ninth Circuit appeals court revived the case in August 2023, prompting Nvidia to petition the Supreme Court.
While Nvidia contends the lawsuit relies on fabricated expert information, the DOJ and SEC rebut this 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 supporting the investors, arguing “private enforcement of the federal securities laws is vital to the integrity of US capital markets.”
The case highlights ongoing scrutiny of tech companies’ disclosures around cryptocurrency-related business activities. A Supreme Court decision to allow the lawsuit to proceed could set an important precedent for investor actions related to crypto industry exposure.