NVIDIA may reopen a case against NVIDIA for hiding data on graphics card sales to miners

The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have approached the Supreme Court, the highest judicial authority in the United States, urging it to allow the continuation of a class-action lawsuit by investors against NVIDIA, in which the company is accused of financial manipulation related to the sale of graphics cards for cryptocurrency miners.

On October 2, in their document, U.S. Deputy Attorney General Elizabeth Prelogar and SEC Senior Counsel Theodore Wyman stated that the lawsuit contains "sufficient details" to overcome the previous district court ruling that dismissed it. They also added that the Supreme Court should grant permission for its restoration through the appeals court.

Investors first filed the lawsuit against NVIDIA in 2018, claiming that the company concealed over $1 billion in revenues from sales of graphics processing units (GPUs) to cryptocurrency miners. The lawsuit alleges that the company's sales were artificially inflated due to miner demand, which became evident when NVIDIA's sales sharply declined in 2018 alongside the cryptocurrency market.

Although the case was dismissed, in 2021 the U.S. Ninth Circuit Court of Appeals in San Francisco revived it, after which NVIDIA agreed to pay a fine of $5.5 million.

Now, a group of investors has filed an appeal that led to the case's revival. NVIDIA, in turn, has submitted a petition to the Supreme Court to overturn this decision.

Additionally, 12 former SEC employees filed a separate document supporting the investors' lawsuit, emphasizing that "private enforcement of federal securities laws is vital to the transparency of U.S. capital markets."

On October 2, six additional documents in support of the investors were filed. Among them were quantitative experts, law professors, institutional investors, the American Association for Justice, and a Coalition Against Fraud.

Strangely, NVIDIA's (NVDA) stock actually rose rather than fell. This was attributed to comments made by CEO Jensen Huang on October 3, stating that demand for next-generation Blackwell chips was "fierce."

"Blackwell production is on track," Huang said. "Everyone wants to have more of everything and everyone wants to be first."

NVIDIA's stock has increased by approximately 170% over the past 12 months and more than 2700% over the past five years. Since the beginning of 2024, NVIDIA has risen by about 150%.

Additionally, NVIDIA's securities are gaining value as the company supported ChatGPT developer OpenAI (MSFT) in its latest funding round, which concluded on Wednesday. OpenAI managed to raise an additional $6.6 billion, bringing its valuation to $157 billion, which serves as another "bullish" signal for the AI boom.