American graphic processing units (GPU) maker Nvidia (NASDAQ: NVDA) withheld material information from its investors regarding the effect that block reward miners had on its revenue in 2018, the U.S. Securities and Exchange Commission (SEC) has found.
In a settlement that the regulator made public recently, Nvidia agreed to a cease-and-desist order as well as a $5.5 million penalty without admitting or denying the SEC’s findings.
During the second and third quarters of fiscal year 2018, most digital currencies were shooting up on the price charts and block reward mining was becoming quite popular. As such, many users of Nvidia GPUs, who previously only used them for gaming, started using them to mine digital assets, the SEC found.
Nvidia, however, failed to disclose the effect this shift in usage of its products was having on its revenue in its Form 10-Q as the law requires.
The SEC took particular issue to the fact that despite failing to acknowledge the effect that the new demand was having on its gaming business, the California-based company did make statements about how other aspects of its business were being affected by the demand for digital currencies.
Nvidia’s gaming category rose 52% on an annual basis in Q2 in 2018 and by 25% the following quarter.
The SEC also asserted that Nvidia was well aware of the effect that the miners had on its revenue. It claimed that Nvidia’s sales staff in China is on record as claiming that the miners were pushing up demand for GPUs and that the company’s management made efforts to go after the lucrative market.
Kristina Littman, the Chief of the SEC Enforcement Division’s newly-renamed and expanded Crypto Assets and Cyber Unit commented, “NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market. All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”
Watch: CoinGeek New York presentation, How TAAL is leading the blockchain transaction processing sector
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.