NVIDIA fined $5.5 million over failure to disclose sales to cryptocurrency miners
NVIDIA has settled a case with the United States Securities and Exchange Commission (SEC) for US$5.5 million.
The SEC charged NVIDIA for failing to disclose sales of GPUs to cryptominers. The SEC claims that NVIDIA's sale of GPUs to cryptominers constituted a significant portion of the manufacturer's gaming-related revenue in fiscal year 2018, and NVIDIA failed to disclose this fact to investors.
According to the SEC, NVIDIA didn't disclose these sales on its Form 10-Q, which is a required quarterly earnings report. NVIDIA's gaming revenue increased by 52% year-over-year in the second quarter of fiscal year 2018 and by 25% year-over-year for the third quarter of that same fiscal year. However, a "significant factor in the material year-over-year growth" in NVIDIA's gaming business included sales of GPUs to cryptominers. NVIDIA did not disclose this in its quarterly reports.
This matters because of the volatility of cryptocurrencies. As prices for cryptocurrencies like Bitcoin and Ethereum rise, so does the demand for hardware used for mining, or generating, the cryptocurrencies. Since the prices for certain cryptocurrencies rose dramatically during this time, the demand for NVIDIA GPUs, which are popular options for mining-specific cryptocurrencies, also rose. As such, NVIDIA enjoyed increased sales revenues of these GPUs.
NVIDIA neither confirmed nor denied the SEC's findings and claims, opting instead to pay a US$5.5 million civil penalty and agree to a cease-and-desist order.
For more details on this case and settlement, you can read the SEC's statement here.