Cryptocurrency mining income misleading investors sued, NVIDIA appeals, accepted by the US Supreme Court

The U.S. Supreme Court on Monday agreed to hear a lawsuit filed by NVIDIA, seeking to dismiss a securities fraud lawsuit previously brought against it. NVIDIA was accused of misleading investors on how much of its revenue came from the volatile cryptocurrency industry.

Previously, led by the Swedish Stockholm investment management company E. Ohman J:or Fonder AB, a group of NVIDIA shareholders filed a collective lawsuit against NVIDIA and its CEO, Huang Renxun, alleging violations of the 1934 U.S. Securities Exchange Act. They claimed that NVIDIA's financial reports in 2017 and 2018 falsely downplayed the amount of revenue growth coming from cryptocurrency-related purchases, seeking unspecified economic compensation.

The plaintiffs claimed that in 2017-18, NVIDIA CEO Huang Renxun concealed the fact that record revenue growth was being driven by mining-related sales of the company's flagship product, the GeForce GPU, rather than gaming sales. These omissions misled investors and analysts interested in understanding the impact of cryptocurrency mining on NVIDIA's business.

However, U.S. District Judge Haywood Gilliam Jr. dismissed the lawsuit in 2021, but the U.S. Ninth Circuit Court of Appeals in San Francisco reinstated the lawsuit a week ago with a 2-1 vote. The Ninth Circuit Court found sufficient grounds for the plaintiffs' allegations that Huang Renxun made "false or misleading statements, and did so intentionally or recklessly," allowing the case to proceed.

NVIDIA has urged the Supreme Court to hear its appeal, arguing that the Ninth Circuit Court's ruling would open the door to "abusive and speculative litigation."

While NVIDIA now leads the AI boom, with AI chips driving rapid growth and soaring market value, before the AI wave, NVIDIA was primarily known for its high mining efficiency products. Crypto enthusiasts would typically use NVIDIA GPUs' computing power to perform complex mathematical calculations to obtain cryptocurrencies like Bitcoin, and with Bitcoin prices hitting new highs at the time, NVIDIA graphics cards became highly sought after products.

In 2022, NVIDIA agreed to pay $5.5 million to settle allegations with U.S. authorities over its failure to properly disclose the impact of crypto mining on its gaming business.

NVIDIA's stock price rose 0.32% on Monday to $132.30. Boosted by the AI boom, NVIDIA has surged 175% year-to-date.

Additionally, on June 10, the U.S. Supreme Court also agreed to hear a similar case where Meta's Facebook sought to dismiss a lawsuit accusing the company of private securities fraud. The lawsuit alleged that Facebook misled investors in 2017 and 2018 regarding the misuse of user data by the company and third parties This class action lawsuit is led by Amalgamated Bank, and after the lawsuit was accepted by the lower court, Facebook filed an appeal.

Furthermore, the Supreme Court will hear the case of NVIDIA and Facebook during its next session, with the hearing expected to begin in October this year