Supreme Court Rejects Nvidia’s Appeal, Greenlights Cryptomining Lawsuit

The U.S. Supreme Court has recently ruled against Nvidia in its attempt to end a class-action lawsuit initiated in 2018. This lawsuit, centered around cryptocurrency mining, accuses Nvidia of deceiving its investors.

In November, the Supreme Court reviewed arguments from Nvidia’s lawyers and today, they summarily rejected the appeal with a brief statement, proclaiming Nvidia’s petition for intervention by the Supreme Court as “dismissed as improvidently granted.”

The litigation was initiated by the Swedish company E. Ohman J:or Fonder AB, which claims that Nvidia did not fully disclose to its shareholders the significant role that cryptocurrency mining sales played in its revenue around the year 2018. The lawsuit suggests that Nvidia intentionally kept investors in the dark about the burgeoning cryptomining sector.

According to the lawsuit, Nvidia’s omission of detailed information about the impact of cryptocurrency mining in its SEC filings breached the Securities Exchange Act of 1934—this act established the SEC and mandates corporate disclosures to the government and investors. In 2022, Nvidia settled with the SEC for $5.5 million regarding its failure to report how cryptocurrency impacted its gaming division during 2018 and 2019, though it neither admitted nor denied the allegations made by the SEC.

A judge in California initially dismissed the class-action suit against Nvidia in 2021, however, this decision was overturned by the 9th U.S. Circuit Court of Appeals in San Francisco. Subsequently, Nvidia sought the Supreme Court’s endorsement to reinstate the initial dismissal, arguing that the continuation of the lawsuit could set a dangerous precedent nationally, giving plaintiffs a simplified framework to bypass the Private Securities Litigation Reform Act, which aims to protect against baseless lawsuits.

However, the Supreme Court was not persuaded by Nvidia’s argument. Justice Sonia Sotomayor found Nvidia’s appeal to be “concerning.”

“We usually do not grant certiorari to correct errors,” Sotomayor commented. “I’m not sure what guideline we could establish that would clarify more than what our current precedents already do.”

Due to the narrow focus of the class-action lawsuit against Nvidia, the Supreme Court deemed it inappropriate for review, given that Supreme Court cases typically establish broad legal standards.

The lawsuit will now proceed in the 9th Circuit Court. With Nvidia at the forefront as the largest global company heavily reliant on cryptocurrency and AI markets, it continues to be ensnared in legal difficulties. Most recently, Nvidia faced a new antitrust lawsuit from China’s State Administration for Market Regulation, potentially facing fines up to $1.03 billion for failing to keep commitments made to Beijing following its acquisition of Mellanox in 2020.