U.S. SEC slaps Nvidia with a $5.5 million fine over GeForce GPUs used for crypto

Nvidia paid a $5.5 million fine to settle charges for failing to disclose in its quarterly income statements during the 2018 fiscal year that it had received significant income from cryptomining, according to the U.S. Securities and Exchange Commission.

The chip manufacturer only said that it had seen material growth in its gaming business. SEC rules require that a company disclose when revenue is received from a “volatile business” so that investors can make an informed decision about whether the company’s actions are indicative of future performance.

Specifically, Nvidia violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934, according to the SEC.

“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 cryptomining,” the SEC said.

Mining cryptocurrencies started taking off back in 2017. As a cost-effective way of mining crypto, consumers began using GPUs to perform the repetitive tasks mining cryptocurrencies entails. In February 2018, for example, Nvidia reported a record revenue of $2.91 billion (up 34 percent) in the fourth quarter of the year. At that time, the price of Bitcoin was about $9,500. That’s quite a jump, as it was $1,500 a year previous.

“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, in a statement. “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”