American chipmaker Nvidia (NVDA) has filed for the dismissal of a complaint alleging it fraudulently attributed over $1 billion in sales to gaming markets amid the 2017 crypto bubble.
As per a Law360 report, the major manufacturer of graphics processing units (GPUs) and computing hardware argued that some investors cherry-picked corporate statements while ignoring others that supposedly showed transparency.
Disgruntled investors have alleged that Nvidia’s financial reports misled them into believing that high-demand for its gaming chips was entirely separate from the cryptocurrency boom.
Graphics cards from the American-based Company are one of the best for mining, such as its popular ‘GeForce’ and ‘GTX’ products, which are favored by both gamers and crypto miners.
Nvidia also rolled out a GPU explicitly built for crypto mining dubbed ‘Crypto SKU’ in May 2017.
How the Lawsuit against Nvidia Commenced
The computer processing startup stands accused by a group of shareholders of attempting to disguise the sales of as much as $1 billion in GPUs used for crypto mining as gaming hardware.
The lawsuit dates back to the height of the crypto bubble in 2017, but an amended suit was filed in California in May of 2020.
The amended class suit accuses Nvidia CEO Jensen Huang and Jeff Fisher, head of gaming, claiming they knew the rise in GeForce GPU sales was linked to the crypto mining boom and wasn’t going to last in the long-term.
The plaintiffs claim the defendants picked a scheme that would exploit miners’ zealous demand for GeForce GPUs while falsely informing investors that the surge in GeForce sales came directly from gamers, not miners.
They then allege the company made it appear as if its revenue was shielded from the volatility of the crypto markets. Unfortunately, Nvidia’s share price plunged by over 20% after the demand for its GPUs reduced from the mining craze the year before.
As cryptocurrency prices dropped considerably, so, too, did miner profits, forcing many operations to close down.
The lawsuit now seeks damages from the company and its executives for what the plaintiff’s claim is a blatant violation of the U.S. Exchange Act for falsifying the real source of Nvidia’s revenues.
Amended Complaint Rejected
Now, on June 30th, Nvidia had rejected the amended complaint by shareholders, stating that its executives did not lie when they described crypto sales as representing a “small” portion of its revenue.
In fact, CEO Jensen Huang couldn’t have known for sure whether users were buying GPUs for mining or for gaming.
The graphics firm also emphasizes that the original complaint was dismissed due to the allegations relying “entirely” on a report produced by Prysm Group, which Nvidia’s legal counsel dubs as speculative expectations of 3rd-party analysts.