The U.S. Securities and Exchange Commission (SEC) is fining tech giant Nvidia for inadequately disclosing how much crypto mining directly impacted the company’s revenue stream.
According to a recent statement released by the SEC, Nvidia failed to accurately divulge that crypto mining was critical to how much money they earned in the fiscal year of 2018 through selling graphics processing units (GPUs), which are usually associated with PC gaming.
“The SEC’s order finds that, during consecutive quarters in NVIDIA’s fiscal year 2018, the company failed to disclose 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…
In two [tax forms] 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.”
The SEC alleges that Nvidia implied its growth in the gaming industry was organic and not correlated with demand for crypto assets and notes the company was willing to reveal that digital assets affected other aspects of its business.
“The [SEC] 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.”
Says Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit,
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market. All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete and accurate.”
Nvidia was found in violation of the Securities Act of 1933 and the Securities Exchange Act of 1934, according to the statement. The firm has agreed to a cease-and-desist order and to pay a $5.5 million fine.
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