David Edwards
In a significant development for securities law, the U.S. Justice Department (DOJ) and the Securities and Exchange Commission (SEC) have jointly urged the Supreme Court to revive a class-action lawsuit against Nvidia, claiming the tech giant misled investors about its sales to cryptocurrency miners. Filed on October 2, the amicus brief from U.S. Solicitor General Elizabeth Prelogar and SEC senior attorney Theodore Weiman supports investors’ claims, arguing the case deserves consideration by the Ninth Circuit after a district court’s dismissal.
The lawsuit stems from a 2018 action in which investors accused Nvidia of concealing over $1 billion in GPU sales to crypto miners. The plaintiffs allege that CEO Jensen Huang and Nvidia’s executive team underrepresented the company’s reliance on crypto-driven sales, a dependency they argue became evident when Nvidia’s sales plummeted in tandem with the crypto market’s downturn that same year.
The DOJ and SEC’s involvement underscores the importance they place on safeguarding securities laws intended to prevent abusive litigation. Their brief states that “meritorious private actions are an essential supplement” to criminal and civil enforcement actions by both agencies. Citing supporting evidence, including statements from former Nvidia executives and an independent report from the Bank of Canada estimating Nvidia understated crypto revenue by $1.35 billion, the DOJ and SEC refuted Nvidia’s assertion that plaintiffs relied on inaccurate expert testimony.
In addition to the government support, former SEC officials also filed a separate amicus brief backing the investors, criticizing Nvidia’s proposed standards for limiting plaintiffs’ access to internal documents and experts before discovery. This argument, they assert, would hinder transparency and reduce protections for U.S. investors.
The Supreme Court’s decision on whether to allow the case to proceed could set a critical precedent for securities-related lawsuits in technology sectors tied to volatile markets like cryptocurrency. The court’s ruling will determine if Nvidia must face renewed scrutiny over alleged misrepresentations that, according to plaintiffs, materially impacted investor decisions.
