Supreme Court Declines Nvidia Appeal in Crypto-Related Fraud Case, Reviving 2018 Lawsuit
In a significant legal development, the U.S. Supreme Court has opted not to hear Nvidia Corporation's appeal concerning a securities fraud lawsuit linked to its cryptocurrency-related sales, leaving a prior ruling by a lower court intact.
The lawsuit, filed by Swedish investment firm E. Ohman J:or Fonder AB, claims Nvidia misled investors regarding the scope of its revenue tied to cryptocurrency mining during the digital currency boom of 2017 and 2018. The allegations focus on Nvidia’s alleged downplaying of the financial risks associated with the volatile cryptocurrency market, which later contributed to a 28% drop in the company’s stock price when crypto profitability plummeted.
At the heart of the controversy are Nvidia’s graphics chips, which gained prominence among cryptocurrency miners during the Bitcoin and Ethereum surge. However, as mining profits dwindled in late 2018, the company’s revenue projections fell short, sparking investor concerns.
The Supreme Court issued a brief, one-line order without elaborating on its decision to dismiss the appeal. Nvidia contended that the plaintiffs had not substantiated claims that its statements were false or intentionally deceptive.
This legal challenge is not Nvidia's first brush with regulatory scrutiny. In 2022, the company reached a $5.5 million settlement with U.S. regulators over related disclosure practices, although it admitted no wrongdoing.
Notably, the case has drawn support from President Joe Biden, further highlighting its significance. Meanwhile, Nvidia’s stock performance has soared, driven by the artificial intelligence boom, with a staggering 174% increase year-to-date. Over the past five years, Nvidia’s stock has surged an extraordinary 2,436%, significantly outpacing Bitcoin’s 1,292% rise during the same period.
As the revived class action lawsuit proceeds, it underscores the intersection of evolving technologies, financial markets, and regulatory scrutiny.