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Nvidia did not disclose crypto as a revenue generator

People gather at the Nvidia stand at the Mobile World Congress mobile phone show on Thursday, February 27, 2014 in Barcelona, ​​Spain. The Securities and Exchange Commission said it has settled charges against Nvidia on Friday, May 6, 2022, for “inadequate disclosures” related to the impact of cryptocurrency mining on its gaming business. The tech company will pay a fine of $5.5 million and agreed to a cease and desist order Credit: AP Photo/Manu Fernandez, File

Nvidia, a big tech company that has aggressively expanded into gaming, will pay a $5.5 million fine for failing to disclose that cryptomining was a significant source of revenue growth from the sale of cryptocurrencies. graphics processing units produced and marketed for games.

Cryptocurrencies are extremely volatile, and the U.S. Securities and Exchange Commission said on Friday that the Santa Clara, California-based company failed to disclose to investors in 2018 the potential future risks of such sales.

“Nvidia’s disclosure failures deprived investors of critical information to assess the company’s business in a key market,” said Kristina Littman, head of the SEC Enforcement Division’s Crypto Assets and Cyber ​​Unit. .

The company also agreed to a cease and desist order, the SEC said. Nvidia neither admitted nor denied the SEC’s findings and declined to comment on Friday.

Cryptominers are paid for verifying crypto transactions. As the crypto craze began to spread in 2017, Nvidia’s graphics processing units designed and marketed for gaming were increasingly used by Nvidia customers to mine cryptocurrency, according to the SEC.

The company reported significant revenue growth from its gaming business in 2018 and knew that those sales were “largely cryptomining-driven,” but it did not disclose this in regulatory filings. available to investors, the SEC said.

“These large fluctuations in earnings and cash flow are related to volatile activity allowing investors to determine the likelihood that past performance is indicative of future performance,” the SEC said.

Cryptocurrencies are an extremely volatile market. The price of bitcoin, a more stable cryptocurrency compared to myriad others, rose from around $35,000 each in January to nearly $48,000 in March. That price on Friday had dropped again to around $36,000.

The SEC said Nvidia’s failure to disclose its impact of cryptocurrency on game sales was particularly misleading, as the company disclosed that other parts of its business thrived due to demand for crypto, ” giving the impression that the company’s gaming business was not materially affected by cryptomining.”

Nvidia Corp. releases its first quarter results later this month.

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