Nvidia fined $5.5 million for hiding GPU sales to crypto miners

The US Securities and Exchange Commission (SEC) has fined Nvidia $5.5 million USD over claims that the company hid how many of its gaming graphics cards were sold to cryptocurrency miners. The SEC says that Nvidia misled investors by reporting revenue as “gaming” revenue, when in fact that money was coming from crypto-related sales. 

There has long been a suspicion that a significant portion of gaming graphics card stock has been sold to cryptocurrency miners, and not just this generation either. There have been crypto spikes in the past that have led to graphics card shortages and sky-high prices in previous generations too. Specifically, the SEC claims Nvidia misled investors during the 2018 fiscal year, when the company “failed to disclose that crypto mining was a significant element of its material revenue growth” that year due to increased GPU sales.

The SEC announced the charges (via The Verge) and the $5.5 million fine today, saying:

“In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by crypto mining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance.”

The announcement goes on to add: “The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by crypto mining.”

Ultimately, Nvidia was found to be in violation of the Securities Act of 1933 and the Securities Exchange Act of 1934, and as such, Nvidia has been issued a C&D order and a $5.5 million fine.

KitGuru Says: Nvidia did catch some flack for this at the time and the company has already begun separating crypto and gaming revenue in earnings reports. The company has also tried to push crypto miners away from GeForce GPUs and towards dedicated mining cards, although the CMP line has not been as popular as GeForce. 

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