Nvidia fined $5.5 million for hiding how many gaming GPUs were sold to crypto miners

Illustration by Alex Castro / The Verge

The company will pay $5.5 million to settle charges that it obscured how many of its graphics cards were sold. The charges and settlement were announced by the US Securities and Exchange Commission. The order claims that Nvidia misled investors by reporting a huge boost in revenue, hiding how much of its success was due to the volatilecryptocurrencies market. As part of the settlement, Nvidia agrees to stop failing to disclose information.

The charges are related to the financial reports. According to the SEC, there was an explosion in the sale of mining related products by Nvidia. The cause of scarcity of graphics cards was reported to be due to mining, and a separate CMP line was launched for that purpose. The company's sales personnel in particular in China reported what they believed to be significant increases in demand for gaming graphics cards.

The boom-and-bust nature ofcryptocurrencies made it riskier to invest in it.

Mining-related sales were not mentioned as a factor in the gaming division's success. The SEC thought that it was being deceptive when it mentioned that it was an important factor in other markets. Fears of investors turned out to be correct. It slashed its quarterly earnings projections by half a billion dollars due to a crash incryptocurrencies and a weak Chinese market.

The SEC's head of cyber unit says that disclosure failures deprived investors of critical information to evaluate the company's business in a key market.