Key Takeaways
- On March 25, a federal judge in California certified a class action lawsuit against Nvidia and CEO Jensen Huang
- Plaintiffs allege Nvidia concealed more than $1 billion in GPU sales revenue driven by cryptocurrency miners, not gamers, throughout 2017–2018
- In 2022, Nvidia settled with the SEC for $5.5 million over inadequate disclosure of crypto mining’s influence on gaming segment revenue
- The certified class includes all investors who purchased NVDA shares from August 10, 2017 through November 15, 2018
- A case management hearing is scheduled for April 21 via Zoom; NVDA shares traded at $174.03, declining 2.5%
Nvidia (NVDA) shares were quoted at $174.03, declining 2.50% during the session.
Shares retreated following a California federal court decision that pushed the multi-year cryptocurrency revenue litigation closer toward a potential trial.
The Foundation of the Lawsuit
The central allegation is simple: Nvidia attributed surging gaming GPU sales to increased demand from PC gamers. But the complete picture was different.
Throughout the 2017 cryptocurrency surge, Ethereum mining operations were purchasing GeForce graphics cards in massive quantities. This demand was silently fueling a substantial portion of what Nvidia classified as “gaming” revenue.
Quarterly revenue surged by 52% followed by 25% year-over-year across these reporting periods. Investors, according to the lawsuit, remained unaware of how much growth depended on volatile crypto markets.
When Bitcoin collapsed in 2018 and mining profitability evaporated, GPU demand plummeted. Gaming segment revenue declined sharply, and the cryptocurrency foundation underlying prior growth became retrospectively apparent.
Nvidia’s Q4 FY2019 earnings discussion compounded the problem. Management explicitly attributed the revenue downturn to weakened crypto mining demand — a statement that directly contradicted earlier characterizations of the growth drivers.
Prior SEC Settlement
The Securities and Exchange Commission acted before this lawsuit progressed. In May 2022, Nvidia agreed to a $5.5 million settlement after the SEC determined the company inadequately disclosed how cryptocurrency mining materially affected gaming GPU sales in Q2 and Q3 of fiscal 2018.
The commission’s enforcement division stated Nvidia’s disclosure shortcomings prevented investors from accessing critical information needed for informed decision-making.
Nvidia resolved the matter without acknowledging liability — a settlement structure that maintained its legal position while essentially confirming the underlying factual claims.
The private litigation now advances beyond where the SEC action concluded. The question isn’t whether disclosure gaps existed, but rather who bears financial responsibility.
Plaintiffs further contend that Nvidia personnel actively monitored cryptocurrency market movements and correlated them with GPU sales data throughout those quarters. According to the complaint, this makes executive-level statements about gaming demand intentionally misleading — beyond mere omission.
Judge Haywood Gilliam certified the investor class on March 25, encompassing all NVDA shareholders who purchased stock from August 10, 2017 through November 15, 2018. The certification is procedural and doesn’t establish whether Nvidia’s disclosures constituted fraud.
A case management hearing is set for April 21 through a publicly accessible Zoom webinar.
Nvidia stated: “Investors who purchased NVIDIA in the 2017-2018 timeframe have done incredibly well, as our corporate strategy unfolded as we consistently predicted. We will address the complaint in court.”
