The Securities and Exchange Commission (SEC) has revealed that it brought charges against a leading tech company, NVIDIA, for its failure to disclose how crypto mining activities had been affecting its business. The company will pay $5.5 million in settlement to the commission.
According to a press release issued by the regulator, NVIDIA did not reveal that a substantial part of its revenue was coming from the sale of its gaming graphics processing units (GPUs) which crypto miners had increasingly used to mine digital assets.
The SEC’s order finds that, during consecutive quarters in NVIDIA’s fiscal year 2018, the company failed to disclose that crypto mining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming.
The SEC conceded that though the tech company revealed material growth in its business, it failed to disclose that this performance was driven by crypto mining which is “related to volatile business for investors to ascertain the likelihood that past performance was indicative of future performance.”
A top executive of the SEC, Kristina Littman, said
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.
The NVIDIA GPU has increasingly been used for Ethereum mining. However, with the network pivoting into a proof of stake network, the value of these machines has steadily been on a decline since the beginning of the year.
SEC’s crypto enforcement drive
The SEC, under Gary Gensler, has shown a willingness to regulate the crypto industry. The chairman, in one of his interviews, had urged crypto firms to register with it so that they can better protect investors.
Already, the commission has scored several enforcement and settlements against the industry. Its case against Ripple, the parent company of XRP, is also believed that it would cause a pivotal shift in the industry.