NVIDIA Faces Class Action After Buying Lawsuit Ready for $1 Billion in Crypto-Mining Income Claims – Stock Dips 7%
Shares of NVIDIA, NVDA, fell 7% on Thursday after a US federal judge allowed an investor lawsuit to proceed as a class action, reviving allegations that the company and CEO Jensen Huang hid more than $1 billion in crypto-mining-related graphics card sales.
NVIDIA Accused of Hiding $1 Billion in Crypto Sales
The lawsuit, which was first filed in 2018, alleges that NVIDIA misled shareholders by investing more in gaming capital while undercutting a larger offering. cryptocurrency miners.
The plaintiffs maintain that the company placed orders from miners with consumer GeForce gaming cards rather than reporting them under dedicated crypto product lines, increasing the appearance of organic gaming growth.
Related Reading
According to internal evidence and documents disclosed in filing in courtan independent analysis puts undisclosed crypto-related GPU revenue at between $1.1 billion and $1.35 billion—far exceeding what NVIDIA publicly acknowledged at the time.
In court documents, an insider identified as “FE 1” described how the tracking system monitored miners’ purchases; the other, “FE 2,” said Huang participated in sales meetings where crypto-driven demand and its effects on revenue were discussed.
Plaintiffs dispute these accounts, as well internal recordsshow that NVIDIA was aware of the scale of demand for miners but publicly downplayed its importance.
Class Action Assured Despite Corporate Defense
NVIDIA has long emphasized that crypto mining only makes up a small part of its business and that any mining-related exposure was largely restricted to dedicated Crypto SKUs within its OEM segment.
NVIDIA’s defense received support from industry groups: in August 2024, the Digital Chamber of Commerce filed an amicus brief urging the US Supreme Court to overturn the Ninth Circuit’s decision that had partially revived the case.
Administrators had it before approved NVIDIA for related disclosure issues. In 2022, the Securities and Exchange Commission (SEC) fined the company $5.5 million and issued a cease and desist order for allegedly failing to fully disclose how crypto-mining demand affected its 2018 financial results.
Despite that settlement, the plaintiffs say newly surfaced internal emails and evidence support their contention that NVIDIA’s public statements misrepresented 2018 revenue drivers.
Related Reading
The alleged cover-up had real market consequences: when cryptocurrency prices fell in late 2018, and miner’s need steamed, NVIDIA significantly lowered its revenue guidance, citing excess inventory and weak miner orders.
The stock fell during two trading days, prompting the investor’s claim that has now been approved as a class action by Judge Haywood S. Gilliam Jr. Judge Gilliam reached the certification after NVIDIA failed to show that its statements had no effect on the company’s stock price.
The court filings also include an internal email from a senior vice president that suggested NVIDIA’s value remained high because of the company’s public recognition—something the plaintiffs point to as evidence of a market effect.
At the time of writing, NVDA was trading at $172, down about 18% from its all-time high of $212 set in October of last year.
Featured image from CNBC, chart from TradingView.com
