SEC issues charges against NVIDIA for failing to disclose information regarding crypto mining contributing to major revenue gain. The investors of the firm were also kept in the dark.
Crypto mining is yet a matter of concern for the regulators as it can pose a threat to the consumers and the economy of a country. Some countries have laid strict regulations for companies to comply with when it comes to mining digital assets, failing to do so will result in serious charges.
On May 6, the Securities and Exchange Commission (SEC) issued a press release stating that the software company, NVIDIA Corporation has failed to disclose adequate information “concerning the impact of crypto mining on the company’s gaming business.” The regulator has found in an investigation led by Brent Wilner of the Crypto Assets and Cyber Unit, that the company has failed to reveal consecutively in both quarters of NVIDIA’s fiscal year 2018 that crypto mining plays a major role in the growth of its revenue.
The SEC has also found that NVIDIA intentionally concealed the information and created an impression that crypto mining was not having a significant effect on its gaming sector. The software firm has not admitted or denied the allegations but has agreed to pay a civil penalty worth $5.5 million to a cease-and-desist order, says the SEC.
In the press release, it is mentioned that the company has violated Section 17(a) (2) and (3) of the Securities Act of 1933 as NVIDIA did not disclose the critical information even to its investors. The section states that it is illegal to “employ any device, scheme, or artifice to defraud”, “obtain money or property” by using material misstatements or omissions, or to “engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.”
Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit has said, “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate.”