Nvidia's appeal to overturn securities fraud lawsuit over crypto sales

The US Supreme Court has agreed to hear an appeal by artificial intelligence chip maker Nvidia, in an attempt to overturn a securities fraud lawsuit. The company has been accused of misleading investors about the proportion of its sales tied to volatility in the cryptocurrency industry. The suit was brought by shareholders in California, led by Stockholm-based investment management firm E. Ohman J:or Fonder AB, who are seeking unspecified monetary damages.

Santa Clara, California-based Nvidia has seen a significant increase in its market value, largely due to the AI ​​boom. In 2018, the company's chips became a popular choice for cryptomining, a process that involves solving complex mathematical problems to secure cryptocurrencies like bitcoin.

Plaintiffs in the 2018 lawsuit alleged that Nvidia and its top officials violated the Securities Exchange Act of 1934. They alleged that they made false statements in 2017 and 2018, downplaying the extent to which the company's revenue growth Nvidia was driven by crypto-related purchases. According to the plaintiffs, these omissions misled investors and analysts seeking to understand the impact of cryptomining on Nvidia's business.

In 2021, U.S. District Judge Haywood Gilliam Jr. dismissed the lawsuit, but the San Francisco-based 9th U.S. Circuit Court of Appeals later revived it in a 2-1 ruling. The 9th Circuit determined that the plaintiffs had sufficiently alleged that Nvidia CEO Jensen Huang made false or misleading statements, either knowingly or recklessly, to allow the case to proceed.

Nvidia has urged the justices to hear its appeal, arguing that the 9th Circuit's ruling could lead to “abusive and speculative litigation.” Earlier this year, Nvidia agreed to pay $5.5 million to US authorities to settle charges that it failed to adequately disclose the impact of cryptomining on its gaming business.

The Supreme Court has also agreed to hear a similar case involving Facebook's Meta, which is accused of misleading investors in 2017 and 2018 about the misuse of its user data. Both the Nvidia and Facebook cases will be heard in the next term of the Supreme Court, which begins in October.