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Lawsuits & Litigation

Nvidia Sued Over Cryptocurrency Fallout

— January 2, 2019

Law firms have joined forces to launch a class action against technology company Nvidia, alleging it mislead investors about its ability to withstand a weary cryptocurrency market.

Tom’s Hardware reports that 2017 saw rising interest in cryptocurrency. The cost of certain computer components, such as GPUs, leapt up as individuals and firms invested in better processors and more power.

Consequently, says Tom’s Hardware, component shortages caused price gouging.

Different tech companies took different approaches. AMD, for instance, responded to the cryptocurrency craze by boosting its production. Hardware says Nvidia ‘began stuffing the channel to help push pricing back to sane levels.’

Bitcoin’s value has plunged from approximately $14,000 per unit in November 2017 to $3700 per unit. The costs of mining BitCoin are sufficiently large that the cryptocurrency’s value no longer promises profit for mining firms. Image via Pictures of Money/Flickr.

But the value of digital currencies like BitCoin started to plunge. Its downward spiral throughout 2018 prompted former cryptocurrency ‘miners’ to auction off used graphic cards. Suddenly, says Tom’s Hardware, manufacturers had to contend with unexpectedly low demand and an oversaturation of second-hand parts.

Nvidia wound up with “one to two quarters” of oversupply on some graphics cards. Reduced demand and the need to sell off its existing inventory brought delayed releases of new products. All throughout, says, Nvidia reassured its investors that their business strategy accounted for the volatile cryptocurrency market.

“{NVIDIA] made false and misleading statements to the market. NVIDIA touted its ability to monitor the cryptocurrency market and make rapid changes to its business as necessary. The Company claimed to be ‘masters at managing our channel, and we understand the channel very well,’” claims the lawsuit. “NVIDIA also claimed to the market that any drop off in demand for its GPUs amongst cryptocurrency miners would not negatively impact the Company’s business because of strong demand for GPUs from the gaming market.”

“Based on these facts, the Company’s public statements were false and materially misleading throughout the class period,” the suit says. “When the market learned the truth about NVIDIA, investors suffered damages.”

Nvidia’s share price has plunged concurrently with the value of cryptocurrencies like BitCoin.

In October, Nvidia had a share price of $300. Now, scarcely three months later, it’s more than halved to $133.50.

The Schall Law Firm, along with others, hopes the class action can help recoup losses for anyone who purchased shares in Nvidia between August 10, 2017 and November 15, 2018. suggests the lawsuit might be “jumping the gun,” considering the unique circumstances of the cryptocurrency boom. And in November, Nvidia itself said that the company had excess stock.

“Our near-term market results reflect excess channel inventory post the crypto-currency boom, which will be corrected,” Nvidia said. “Our market position and growth opportunities are stronger than ever.”

Despite Nvidia’s claims, the class action is only one among several troubles. The company’s also suffered from President Donald Trump’s trade war with China—the Asian power accounts for an estimated 20% of Nvidia’s sales.


NVIDIA Slapped With Class Action Lawsuit Tied To Cryptocurrency Implosion

Nvidia Targeted With Class Action Lawsuits Over Crypto Crash

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