A federal judge has certified a class of investors in a lawsuit alleging that Nvidia and its chief executive, Jensen Huang, concealed the degree to which the company’s gaming GPU revenues depended on cryptocurrency mining sales between 2017 and 2018. The order was filed Wednesday by Judge Haywood S. Gilliam Jr. in California federal court. The ruling found that Nvidia failed to demonstrate its statements about crypto mining revenue had no effect on its stock price.
Investors originally filed suit against Nvidia in 2018, claiming the company hid more than one billion dollars in GPU sales connected to crypto mining and that Huang downplayed the scale of that demand. In 2022, the SEC fined Nvidia $5.5 million for failing to adequately disclose the impact of crypto mining on its operations. Those earlier regulatory findings form part of the backdrop against which the current class action proceeds.
Nvidia had argued that crypto mining represented only a minor portion of its overall business and that mining-related sales were tracked separately from its core gaming division. The company also maintained it had its supply chain under control and could manage excess graphics card inventory without difficulty. Plaintiffs, however, allege that a substantial share of crypto-driven revenue flowed through Nvidia’s GeForce gaming GPUs and was recorded within the gaming segment, leaving the company exposed to swings tied to cryptocurrency market cycles.
A key piece of evidence cited by the court was an internal email from an Nvidia vice president, which Judge Gilliam Jr. described as particularly telling. The executive expressed the view that the company’s stock price remained elevated because of those earlier public statements. The court wrote that it could not conclude there was no price impact given such internal evidence.
Plaintiffs point to a series of disclosures in 2018 as the moments when the company’s true exposure became apparent. In August of that year, Nvidia cut its guidance, acknowledged excess inventory, and stated that crypto demand had declined. The situation became clearer on November 15, 2018, when Nvidia CFO Colette Kress said gaming revenue fell short of expectations because post-crypto channel inventory took longer than anticipated to sell through, and that gaming card prices were slow to normalize following what she described as a sharp crypto falloff.
Following the November disclosure, Nvidia’s stock fell approximately 28.5% over the subsequent two trading sessions, according to the plaintiffs. That decline is central to their argument that investors suffered measurable harm as a result of the alleged concealment. The certified class covers all investors who purchased Nvidia stock between August 10, 2017, and November 15, 2018.
The case has had a lengthy legal history. After being dismissed in 2021, it was revived on appeal and survived a failed attempt by Nvidia to bring the matter before the Supreme Court. Class certification does not determine whether Nvidia bears liability, but it allows investors to pursue their claims collectively rather than through separate individual lawsuits, moving the case meaningfully closer to trial. A case conference is scheduled for April 21, at which Judge Gilliam Jr. is expected to outline the next steps in the proceedings.
Originally reported by Decrypt.
