An investor class in a securities case against Jensen Huang, the founder and CEO of Nvidia Corporation (Nasdaq: NVDA), was certified by a federal judge in California on March 25.
The lawsuit alleges that in 2017 and 2018, the company and its CEO misled shareholders about its gaming income.
It particularly concentrates on the percentage of income derived from the sale of graphics processing units (GPUs) to cryptocurrency miners.
Nvidia is a technological business that was founded in 1993 and last year became the first in the world to reach a market capitalization of $5 trillion.
It is currently the largest firm in the world, with a market capitalization of $4.26 trillion. Crypto miners frequently used Nvidia-made GPUs to mine cryptocurrencies like Bitcoin (BTC) during the 2017–18 boom.
Investors sued Nvidia and Jensen Huang for allegedly understating more than $1 billion in GPU sales related to cryptocurrency mining back in 2018.
The plaintiffs claimed that in 2018, the company’s vulnerability to cryptocurrency mining was made clear by a revenue warning on November 15 and an earnings call and guidance cut on August 16, both of which caused shares to decline.
NVIDIA consented to pay a $5.5 million fine to the Securities and Exchange Commission (SEC) in May 2022 for failing to disclose information on how cryptocurrency mining affected the company’s gaming division.
Though the corporation knew that crypto mining was driving much of the surge in gaming sales, it failed to report the large profitability and cash flow swings associated with a “volatile” business, according to the SEC.
On April 21, the court will hold a case management conference
Judge Haywood Gilliam ruled on March 25 that investors may pursue their claims collectively, defining the class as anyone who bought Nvidia stock between August 10, 2017, and November 15, 2018.
The ruling emphasized that the certification is merely a formal measure and does not address the issue of whether or not Nvidia made false claims.
Through a public Zoom webinar, the court scheduled a management conference for the matter for April 21.
As of press time, NVDA stock was trading 2.50% down at $174.03.
