The US Securities and Exchange Commission has fined graphic card giant Nvidia $5.5 million for failing to inform investors about how much of its revenue came from crypto miners. The $5.5 million settlement has been made for “Inadequate Disclosures about Impact of Cryptomining”.

The case dates back to 2017, when crypto miners made it hard for everyone else to buy new graphics cards because of the huge demands from the cryptocurrency mining industry. Nvidia, in its 2018 filings, highlighted $9.174 billion in revenue. The company failed to properly indicate the role crypto played in these figures. But it did say that numbers were dramatically up in the fiscal year 2017 – as much as 52% in one quarter.

Nvidia said that during consecutive quarters in the company’s fiscal year 2018, it failed to reveal that crypto mining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming.

The report highlighted that when the company’s profits spiked that year, Nvidia didn’t disclose the reasons to its investors. But the SEC pointed out that the company’s own workers knew the increasing gaming GPU sales were also related to crypto.

In fact, Nvidia recognized the booming crypto mining market and had come up with the Cryptocurrency Mining Processor (CMP) GPUs. The regulator said the company’s sales personnel, particularly in China, highlighted significant increases in demand for Gaming GPUs due to crypto mining.

But the company could not track when and which specific Gaming GPUs were purchased for the purpose of crypto mining. Nvidia personnel estimated using various assumptions that the impact of crypto mining was at levels that indicate it was a major factor in the year-on-year growth in gaming revenue.

The chipmaker was required to disclose this distinction on Forms 10-Q but failed to do so despite having information at hand. This matters to the SEC because of the volatility surrounding cryptocurrencies. Nvidia didn’t give the full picture to its investors as to why the numbers were just going up.

As such, the agency found Nvidia’s ommissions of material information misleading, given that the company did make statements about other parts of its business being driven by the demand for crypto. This created the impression that Nvidia’s gaming business was not significantly affected by crypto mining.

The SEC said the company deprived its investors of critical information to evaluate Nvidia’s business in a key market.

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