- It’s one of the largest penalties the SEC has imposed on a gaming company to date
- The gaming giant has neither admitted nor denied guilt as a condition of the settlement
Gaming giant Nvidia will pay the SEC $5.5 million for allegedly failing to properly disclose the impact of cryptocurrency mining on its revenue.
The SEC noted that in 2018, Nvidia failed to disclose that cryptocurrency mining was a “significant element of its material revenue growth.”
The processors from the Santa Clara company were developed and marketed for gaming, but customers found that they were also efficient in generating new cryptocurrencies, especially Ethereum.
Notably, the SEC highlighted two Nvidia disclosures from 2018 that reported “substantial” revenue growth in its gaming business, despite Nvidia knowing that growth was largely driven by crypto mining.
“Nevertheless, NVIDIA failed to disclose in its Forms 10-Q, as required, these significant earnings and cash flow variability associated with a volatile business for investors to determine the likelihood that past performance is indicative of future Performance was.” the S called in a press release.
Regulators thought the alleged omission was misleading as Nvidia had already disclosed how other parts of its business were fueled by crypto demand. The US Securities and Exchange Commission said it gave the impression that Nvidia’s gaming sector was not significantly affected by cryptocurrency mining.
Nvidia stock nearly doubled between September 2017 and September 2018, an exciting time for crypto markets fueled by Bitcoin’s first-ever surge to $20,000.
The company’s chipsets remain popular with miners, much to the dismay of gamers. Nvidia even has introduced so-called hash rate limiters on its newer models to curb the high prices and low supply worldwide.
“NVIDIA’s disclosure failure has deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, who heads the SEC’s Enforcement Division’s Crypto Assets and Cyber Unit.
Nvidia agreed without admitting or denying the allegations. The company’s share price fell about 4% during intraday trade on Friday after news of the settlement broke.
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Source: Crypto News Austria