NVIDIA Fined for Inadequate Disclosures in Cryptomining

The Securities and Exchange Commission, America’s most powerful financial watchdog, has reached an agreement with NVIDIA over allegations that NVIDIA under-reported crypto mining’s impact on its gaming business. NVIDIA paid $5.5 million in penalties without admitting to or denying the findings of the SEC.

Inadequate disclosures

According to the SEC press release, the giant chip manufacturer failed to disclose any information about crypto mining as a major source of revenue for the gaming business. The company has been a key player in providing mining facilities with advanced GPUs since 2017, when there was a surge in demand for crypto.

NVIDIA stated in the release that it included GPU sales to crypto miners in its gaming business. However, the company didn’t reveal that cryptomining was a major driver of its “increased gaming sales” in its Forms 10Q as required by SEC.

The authority also found that NVIDIA failed to specify how crypto demand had affected its other business. This gave the impression that NVIDIA’s gaming operations were not closely linked with its mining activities. According to the Commission, investors have been unable to properly evaluate the company’s future performance because of such omissions.

Kristina Littman (Chair of the SEC Enforcement Division’s Crypto Assets and Cyber Unit) argued that NVIDIA’s failures to disclose crucial information had prevented investors from being able to assess its performance fairly. She said:

“All issuers, even those who pursue opportunities involving emerging technologies, must ensure their disclosures are accurate, timely, complete and current.”

The Metaverse: Eyeing it

NVIDIA has been a dominant chip manufacturer for Bitcoin mining equipment for years. But, NVIDIA is also looking to the future metaverse. The company also announced earlier this year that it has launched a program to help artists and content creators work on creating virtual worlds and products.

The giant also announced that it will begin to distribute Omniverse, a software program for creating virtual worlds. It can be used by users to create worlds or exchangeable assets in third-party marketplaces.