The Securities and Exchange Commission (SEC) announced today, May 6 that it settled charges against NVIDIA. The agency said that the charges against the company stem from the fact that it failed to disclose that a substantial part of its earnings were the result of mining of cryptocurrencies.
The technology company has been making sales of graphic cards (GPUs) used in the mining of cryptocurrencies, but this part of its operations was not listed in its annual reports, the agency reported.
According to a release by the SEC, the GPUs sold by NVIDIA were primarily meant for gaming and marketed as such, even though it facilitates behind-the-scenes mining of altcoins (cryptocurrencies).
BREAKING: SEC Charg
— CryptoWhale (@CryptoWhale) May 6, 2022
According to the report, the company’s GPUs were increasingly used for the mining of cryptocurrencies and their company report from 2018 should have reflected that and the possible impact of their operations.
“As demand for and interest in crypto rose in 2017, NVIDIA customers increasingly used its gaming GPUs for cryptomining.”
The SEC release stated that the company failed to attest to the reason behind the increase in their revenue on the Forms 10-Q, even though it was aware that the increase in the sale of their gaming GPUs was the consequence of high demand for cryptocurrency mining and not gaming. Apparently, the buyers of the GPUs were switching their use for mining of digital currencies instead of gaming.
According to the report:
“these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. 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 company is to pay $5.5 million in settlements for the omission.