Supreme Court Allows Class-Action Lawsuit Against Nvidia Over Crypto Mining Claims
The U.S. Supreme Court has cleared the way for a class-action lawsuit accusing Nvidia of misleading investors about its reliance on crypto mining.
The decision came just weeks after the court heard Nvidia’s appeal and days after China announced an antitrust investigation into the chipmaker.
Crypto Crash Fallout: Nvidia Faces Investor Lawsuit Over Alleged Misstatements
On Wednesday, the U.S. Supreme Court announced that it would no longer decide on a lawsuit accusing Nvidia of misrepresenting its reliance on the cryptocurrency mining industry.
In a brief unsigned opinion, the court dismissed the case as “improvidently granted,” indicating it was a mistake to take up the matter. No justices dissented from the decision.
This dismissal upholds a prior appeals court ruling, which allowed most of the case against Nvidia to proceed.
The lawsuit dates back to 2018, when a Swedish investment firm filed the complaint after a downturn in cryptocurrency profitability caused Nvidia’s revenue to fall short of expectations.
This led to a 28% drop in the company’s stock value. Investors allege that Nvidia downplayed its reliance on crypto-related revenue, misleading the market.
The plaintiffs argue Nvidia misrepresented its reliance on the crypto market, inflating its stock value.
Nvidia argued that the lawsuit should be dismissed under the Private Securities Litigation Reform Act of 1995, a law designed to curb baseless securities complaints.
The company argued that the plaintiffs failed to meet two key requirements: identifying specific false statements and providing sufficient evidence that company officials knowingly misled investors.
While a district court initially dismissed the case, a federal appeals court later reinstated it. The Biden administration supported the plaintiffs, further raising the case’s profile.
The Supreme Court’s decision avoids setting a precedent on how the 1995 law should be applied, leaving the appeals court’s interpretation as the guiding standard for now.
As a result, the case against Nvidia will proceed.
China’s Antitrust Investigation: Will Nvidia’s Growth Face New Roadblocks?
The decision resembles a similar move in November when the Supreme Court dismissed a securities fraud case against Facebook.
That case centered on allegations that Facebook failed to disclose a data breach that allowed Cambridge Analytica to collect user information.
Like the Nvidia case, the dismissal upheld an appeals court ruling, enabling the lawsuit to proceed.
In 2022, Nvidia paid the Securities and Exchange Commission (SEC) a $5.5 million fine to settle charges of failing to disclose that crypto mining was a key driver of revenue growth for its gaming graphics cards.
The company did not admit wrongdoing as part of the settlement.
Despite the legal challenges, Nvidia remains a dominant force in the technology sector. Its stock price has surged by 180% this year, driven by its leadership in the artificial intelligence market.
Nvidia’s chips are essential for training and running AI systems, making it a crucial player in the industry.
Adding to Nvidia’s challenges, China recently launched an antitrust investigation into the company.
The probe raises questions about potential violations of Chinese antimonopoly laws, intensifying scrutiny as Nvidia continues its rapid growth.
This lawsuit is part of a broader trend of high-profile class-action cases against tech companies.
The Supreme Court recently dismissed another appeal by Meta, Facebook’s parent company, which sought to block a multibillion-dollar class-action lawsuit over privacy breaches related to the Cambridge Analytica scandal.
