Bad crypto reporting: SEC fines Nividia $5.5m for undisclosed gaming growth
Updated
Nvidia has agreed to pay a $5.5m fine after being charged with failing to report cryptocurrency mining revenue growth adequately, the US Securities and Exchange Commission (SEC) announced on Friday.
“The SEC’s order finds that, during consecutive quarters in NVIDIA’s fiscal year 2018, the company failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming,” the SEC said in a news release.
Nvidia customers increasingly used the company’s gaming GPUs for cryptomining after demand for and interest in cryptocurrencies rose, added the SEC. But the company did not fulfill its requirement to properly disclose significant earnings and cash flow fluctuations that could have helped investors “ascertain that the likelihood that past performance was indicative of future performance."
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The regulator also found that Nvidia’s omissions of material information about the growth of the gaming business misled investors, given that the company made statements about how other parts of the business were driven by demand for crypto.
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, chief of the SEC enforcement division’s crypto assets and cyber unit. “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”
Between 2017 and 2018, Nvidia also received information indicating that cryptomining was a “significant factor” in the company’s year-over-year gaming GPUs revenue, states the SEC order requiring the $5.5m fine. Some sales personnel, particularly in China, reported what they believed to be a significant cryptomining-related increase in GPU demand.
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Big rise
Meanhile, the price of ether, the coin backed by the Ethereum blockchain network, skyrocketed to more than $800 from under $8 between 1 January 2017 and 1 January 2018.
Nvidia has declined to comment on the fine.
