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SEC charges Nvidia with inadequate disclosures about impact of cryptomining

407 points by taubek 4y ago

dean177 4y ago
"The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining. The SEC’s order finds that NVIDIA violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. The order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC’s findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty."
- Lukineus 4y ago
  > "NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty." Cost of doing business.
  - hef19898 4y ago
    Yes, on the other hand not being called out by the SEC for insufficient disclosures helps with investor trust.
  - ekianjo 4y ago
    thats pocket money for nvidia
  - H8crilA 4y ago
    More like the SEC lacked evidence that this was intentional. Remember about the SEC whistleblower program, if you had inside proof of intent the fine would be a lot higher, and you'd get a share of the fine!
    - Melatonic 4y ago
      Wait seriously? What kind of percentage do you get? That is.....both interesting and terrifying in a way
      - smnrchrds 4y ago
        10% to 30%. https://www.sec.gov/whistleblower https://www.sec.gov/whistleblower
  - JumpCrisscross 4y ago
    This sets the stage for shareholder lawsuits, which are better equipped to assess actual damages.
  - nullc 4y ago
    Many of these actions are specifically geared to tee off civil lawsuits, so the total cost can be significantly greater.
sedeki 4y ago
What's the rationale behind this omission on NVIDIA's part?
- synu 4y ago
  Presumably that the fine will be much, much less than whatever the value of the benefit is that they earned from the omission.
  - infinityio 4y ago
    The fine was ~$5M, nvidia made ~$10B last year - It's approximately equivalent to the amount of money they make in 4 hours
- blihp 4y ago
  Minimizing the perception of downside risk in sales when it dries up to keep share prices higher than they otherwise would be. Had they come out and said approximately X% of a given quarter's sales were mining related, it would have most likely been priced into the stock as cyclical sales with a lower resulting multiple. edit: this is an old story see previous discussion https://news.ycombinator.com/item?id=31284952 https://news.ycombinator.com/item?id=31284952
  - Out_of_Characte 4y ago
    Thats still strange as the lowered gaming sales are partly due to increasing prices from crypto miners and higher material costs. Their profit margin and sales only grew larger during this time
    - Sakos 4y ago
      The point is that it's unreliable income. The cryptomarket can crash, which will have an effect on future earnings. If nVidia isn't open about how much of their revenue is at risk, investors can't make informed decisions about investing in nVidia.
- 4y ago
senko 4y ago
duplicate: https://news.ycombinator.com/item?id=31284952 https://news.ycombinator.com/item?id=31284952
YedrickTheYeti 4y ago
Wouldn’t this have been obvious to anyone trading in nvidia shares though?
- deleted 4y ago
  [deleted]
DeathArrow 4y ago
The punishment should be proportional with the sales for cryptomining which they lied about. Investors can be seriously affected by this. A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it.
- thathndude 4y ago
  Agreed. I was invested in NVDA during this period. Should look back and see how the stock performed during the relevant period.
- runeks 4y ago
  I’m curious: how difficult would it be to win a suit against Nvidia with this SEC charge in hand?
- mbesto 4y ago
  > Investors can be seriously affected by this. > A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it. Ok so tell me precisely how much NVDA benefited by not disclosing how much sales were to crypto? I'm a NVDA stock holder and I just don't see what the fuss is. It's been impossible to buy a Nvidia card over the last 3 years due to scalpers and crypto farmers. I guess I thought everyone kinda knew that?
  - birracerveza 4y ago
    The problem seems from stem from the fact that if NVDA disclosed that crypto amounted to 5% of their market when instead it's 5 times as much (random numbers for the sake of the example), investors are bound to suffer more in case of a crypto market crash, because the crypto exposure is much higher than what was disclosed by the company.
    - mbesto 4y ago
      > investors are bound to suffer more in case of a crypto market crash Do we know that actually? There was already outsized demand (demand > supply) for Nvdia GPUs to the extent that consumers literally couldn't buy GPUs for ~2 years (still is a problem) without buying from a scalper. A few things to consider: (1) In most markets where demand outpaces supply, new entrants emerge. That is almost impossible to do in GPUs due to compatibility/support. So we've had pent up demand in that market. (2) Consumers waited for supply to catch up to make the purchase even though they were ready to purchase. (3) AFAIK there was no surcharge implemented by NVDA and this value was captured by scalpers. In fact, the price for performance ratio for the latest series of NVDA GPUs was so good that even if crypto wasn't a thing many consumers were ready to replace their old GPU. (4) Crypto focused demand is a leading indicator of sales for that channel. With the shift to PoS, the overall demand for crypto rigs could shutter overnight. My theory (as an NVDA investor) is that sales wouldn't falter because they were already selling products as fast as physically possible due to supply constraints. The question then therefore is what is the forecast 2-5 years out? NVDA is IMO heavily diversified in markets that have long term plays that easily could substitute any dip in consumer GPUs due to less demand from crypto. TL;DR - I think people are overthinking this and if you don't have any idea of how to calculate what a meaningful penalty should be (i.e. "well the company was set to gain X amount of profit due to their infraction") then it's hard for me to take the argument seriously that $5M "isn't enough".
Traster 4y ago
This is kind of funny because the SEC is basically saying Nvidia held their share price artificially high by doing this, but Nvidia also bought back billions of their own shares, by this logic they were overpaying.
- kgwgk 4y ago
  Securities fraud squared!
- spupe 4y ago
  Stock buybacks also increase stock prices, and a lot of companies are doing it lately.
- projektfu 4y ago
  That is a separate issue. Stock buybacks can be done to reward insiders. A dividend would be distributed equally and has the effect of directly cutting the share price. A buyback distributes cash unequally and puts upward pressure on share prices. Only insiders know for sure if the action is being done to buy back shares on sale or to distribute profits.
  - rileymat2 4y ago
    > and puts upward pressure on share prices I am curious if there is evidence for this. I don’t see how distributing capital that could be used for growth pressures share prices up. People not selling back the shares are trading the current profits for a bigger share of future profits, which may never exist. So I am not sure on a risk adjusted discounted cash flow model there is any justification for increased price pressure. I always presumed that the main benefit of buybacks v dividends was being able to time capital gains for tax purposes. But this is all speculation too, no evidence behind my post.
    - projektfu 4y ago
      There are two reasons in my mind why buybacks are different. The first is that buybacks are reported after the fact and do not directly alter the share price, rather they increase competition for the available shares and reduce dilution. Dividends immediately reduce the share price by the dividend although the price often moves up a little before the ex-dividend rate. The other reason is that there are very few stocks that are being valued by the market on any sort of model. That goes for cash flow models as well as other things like PE ratios, etc. We are in the tinkerbell regime, prices went up over the last 10 years because people are clapping louder. Obviously that is a controversial take but I am not predicting a reversal, just saying that the market overall is in a weird place.
mcv 4y ago
I don't quite get this. Was it not blatantly obvious to everybody that Nvidia's sales were largely driven by cryptominers? Did they specifically market to cryptominers and lie about that or something? I don't quite get what they did wrong. What's also baffling to me is how their share price is taking a nosedive because of this news. Any investor should know about this. And $5 million fine doesn't sound like enough to hurt the company that much. But if it's true that they misled investors, does that mean that investors can get their money back or something? It seems like any investor who wasn't aware of this is now screwed twice.
- cormacrelf 4y ago
  Not putting “blatantly obvious” things in the disclosure documents is WORSE than omitting obscure things. The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover. The prospectus regime for public companies is there to protect ordinary investors who do not know this stuff. The overall effect is to increase the “smartness of money” by avoiding people investing who do not know this basic stuff. And yes there is a robust regime for investors to sue for defrauding them in this fashion.
  - dhzhzjsbevs 4y ago
    The more I learn about finance the more I'm confused how 2008 actually happened. We actually have some pretty good regulations in place.
    - cormacrelf 4y ago
      A lot of it is designed really well but squashing human stupidity on the scale of trillion dollar economies is a perpetual game of whack-a-mole. The message a lot of people got from 2008 that it was the bankers and the system that hurt the little guy and therefore we should no longer trust any of it. And create a new financial parallel universe in which to rediscover why regulation is needed in the first place. Vitalik Buterin today literally suggested an analogue of FDIC insurance for cryptocurrency banks. My view is that the banks did hugely mess up and did not face enough consequences — and the correct approach is to massively enhance enforcement. (In many ways that actually has happened.) But moreover they preyed on stupidity, just massive massive stupidity that will always be there to contend with. Fraud always looks better than real investments to the marks. People have to overlook the shady parts, and to make them do that a product must offer unrealistic returns. Millions and millions of people are not smart enough to tell when that’s happening to them. As long as the SEC and its ilk let these run, people get hurt and everyone suffers, either personally, or from the inefficiency of fraud generally or the collapse of interlinked financial systems when the fraud gets big enough. Dealing with this is a huge task and often unpopular. If you tell millions of Americans they can’t invest in crypto scams, many of them will be royally pissed off, because they were promised riches! That’s even worse than whack-a-mole — letting frauds off the leash for one minute leaves your hands tied unless you are top of your game and have a lot of built up trust. That’s why people keep pointing to the lack of arrests as a huge failure of 2008. As mistakes by government go it was much worse than the bailout, which was rather necessary to limit the damage. It meant people thought the government was in on it, or that they didn’t care. Frankly I think Bitcoin would never have taken off if there were a slew of high profile arrests. It would not have seemed necessary.
omega3 4y ago
I think the gist is that they’ve intentionally misled investors by misclassification of sales from more violative, unpredictable crypto into stable pc gaming market.
- voxic11 4y ago
  There is nothing in this Press Release which indicates the SEC thought nvidia's failures were intentional.
Havoc 4y ago
This is a non story. They missed something in the laundry list of legal disclosures that goes in the financials. Nobody ever looks at those since they’re a useless shotgun approach covering everything short of zombie apocalypse.
- freemint 4y ago
  This is very much not just missing a laundry list of legal disclosures. They actively lied to investors said increased sales of consumer graphic cards was due to a "Fortnite Boom" when it obvious to industry observers that is was a mining boom. Miners and Fortnite players have very different life-time revenue expectation, miners tend flood the used market with used cards dropping the prices that can be asked for future products, gamers tend to keep their cards and buy new cards when they want to play more demanding games. This leads to less of oversupply on the used market. The last mining bust had a huge negative influence on Nvidia.
_jab 4y ago
I'm confused about why this matters. From anecdotal experience, Nvidia seems to be struggling to meet demand for its products right now anyways. It's hard to tell, but I assume that even if crypto took a major hit, Nvidia could still sell a good chunk of its newfound supply to genuine gamers instead. Alternatively, they could invest more into their ML-focused chips instead, which are also supply constrained. Granted, this might not have been true in 2018, which appears to be what the SEC's charge is focused on. Nonetheless, I don't think the huge amount of demand from crypto for Nvidia's products should be construed as a bad thing; there's plenty of other demand.
- Tuna-Fish 4y ago
  Companies are not allowed to lie to their investors. Part of the deal of being a public company is that all communication is communication with their investors. If they told their investors that they were selling GPUs to gamers, while in fact selling most of them to miners, they violated the law. The principle of it being that said investors might have had a different outlook on the company depending on who they were selling to. Besides, there is a difference. Because whenever crypto collapses (and it has twice already in the past), a lot of the existing mining GPUs end up on the secondary market. If this happens now, it will have a material impact on the prices of GPUs going forwards.
  - mschuster91 4y ago
    On the other hand, NVIDIA does not have legal authority to control where its GPUs actually end up being used (nasty things like drivers shutting down when detecting virtualizations aside). How can anyone prove or disprove that a specific percentage of GPUs end up in a specific market, as long as NVIDIA can prove they have kept their usual delivery targets towards wholesale distributors?
    - dematz 4y ago
      This is a good question. I remember having to give my identity before walking out of a store with a computer with a GPU in it, and if someone really wanted to buy multiple GPUs for mining that wouldn't stop them. The SEC lists some facts suggesting nvidia thought they were ending up mining (https://www.sec.gov/litigation/admin/2022/33-11060.pdf https://www.sec.gov/litigation/admin/2022/33-11060.pdf): "NVIDIA launched a product line of cryptomining processors, known as “CMP,” which the company marketed to large cryptomining operations ... Based on known CMP sales, the company identified cryptomining as a significant element of the OEM GPU sales" "NVIDIA also received information indicating that cryptomining was a significant factor in year-over-year growth in NVIDIA’s Gaming GPUs revenue. Some of the company’s sales personnel, in particular in China, reported what they believed to be significant increases in demand for Gaming GPUs as a result of cryptomining" These were the 2 most concrete points to me - management was aware miners drove up GPU prices for gamers and saw it as another big market to capture, and sales attributed increased demand to miners. The rest of it basically says crypto grew, nvidia sales grew, and nvidia thought sales grwe because of crypto. Honestly, I'm not sure it's possible even knowing these factors to know who really bought the GPUs or where they really ended up, but idk all the SEC probably cares about is nvidia not disclosing material seeming information.
twirlock 4y ago
lvl102 4y ago
I remember I was short the stock via puts quite a bit and they kept saying crypto was 5% of the business which I knew was a lie. It turned out great for me. Fast forward to 2022, you see how much of the GPU “shortage” was due to crypto mining especially in Russia (there are enough anecdotes of people in Siberia heating their kitchens with GPUs).
- daniel-cussen 4y ago
  Right so using waste heat that way is more ecological.
  - wffurr 4y ago
    If only the computing hardware generating that waste heat was doing something useful like serving funny cat pictures.
  - IAmEveryone 4y ago
    I have some doubts that any significant amount of cryptomining is actually done in Siberia. Part of that would include a few questions of the definition of “Siberia”, a deep examination (i. e. a suggestion to google) people’s ideas of the weather condition at that hypothetical place, and maybe a comparison of efficiency of heating a typical rural Russian home with coal vs. burning coal to generate electricity to run GPUs, after transmission over sowjet-era grids. Considering how cryptocurrencies seem to attract the get-rich-quick crowd, it’s impressive to see the levels of motivated reasoning they are capable of, since neither motivation nor reasoning alone seem to be among their usual strengths.
  - varenc 4y ago
    If and only if you would have used electrical heating anyway, then using a GPU's waste heat for heating your home is one of the best things you can do with it and it's "100% efficient". That is, 100% of all the energy your GPU consumes also ends up as heat in your house and it's thermodynamically equivalent to any other type of resistive electric heater. Of course, the energy consumed by any even semi-serious mining operation far exceeds a home's heating needs.
deleted 4y ago
[deleted]
t_mann 4y ago
It's kind of strange/funny how much trouble too much demand can cause for a company.
dangerface 4y ago
Is the sec concern trolling nvidia? What do they mean by impact? > the sale of its graphics processing units (GPUs) designed and marketed for gaming SEC recognises that these cards where marketed to gamers and even recognise that the parts of NVIDIA marketed toward crypto mining was reported as crypto mining. It seems like nvidia did business as usual and the real problem is those filthy gamers that aren't gaming. If NVIDIA reported its gaming cards to SEC as crypto cards, now that the crypto market is dead and those cards are being used for gaming would SEC still consider NVIDIA to be in the wrong for their undisclosed impact on gaming? Seems like SEC is mad at gamers for making money instead of gaming and they are taking it out on NVIDIA. Im just glad some one is standing up to these filthy gamers.
- Sakos 4y ago
  > In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining. > “NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,
- Sakos 4y ago
  > Seems like SEC is mad at gamers for making money instead of gaming and they are taking it out on NVIDIA. Im just glad some one is standing up to these filthy gamers. 1) Weird of you to add everything after your first sentence without indicating you edited your comment. 2) I have no idea what you're talking about. This isn't about nVidia reporting their cards as crypto cards. This is about nVidia not reporting what portion of their revenue is subject to volatility in the cryptomarket. SEC isn't mad about anything. It sounds like you're mad, tbh, and I'm not sure why.
daniel-cussen 4y ago
This is true. I met a prince once, named Mikhail von und Zu Lichtenstein Oyarzún. Weird fucking guy, but that's how princes are, I didn't judge. But then lo and behold he traveled to Spain, a country which recognizes nobility, and tried arrogancing his way into a party (like "what do you mean I'm not on the list!?"). The press asked who the fuck is he, asked his parents, his parents weren't his parents, his parents had no idea who the fuck he was. Said as much publicly. "I have no fucking idea who this asshole is" said his father. And then he was on TV in 2017 or 2018 as the world-class bullshitter of all time, but with much contempt. He had hours of talk-shows just for him, his law school professor going in front of the camera saying what he did was illegal because he pretended to have authority. He was a scammer, in particular he posed as a human-rights lawyer targeting victims of torture to get their secrets and extort them. Tried to do it to me, but you can't con an honest John. So what happened, going back to your point? He brainwashed himself, told himself he was a prince 10 million times. But lied to himself literally 10 million times.
- alisonkisk 4y ago
  > He was a scammer, in particular he posed as a human-rights lawyer targeting victims of torture to get their secrets and extort them. Tried to do it to me, but you can't con an honest John. You are calling victims of tortures liars?
  - daniel-cussen 4y ago
    - daniel-cussen 4y ago
      EDIT: You're right I did in fact say victims of torture are liars, at least it can be read that way! Wow, didn't realize it, didn't intend it. So I don't know what he was saying to the others, but he set up many many scams like talking really loud on his cell about "an opportunity going to waste" when we met at Metro el Golf staircase, trying to get me to ask on my own accord what that opportunity was, but I had no curiosity for it. So helping me with torture, I fell for it a bit, but it was something I could not fail to want. So honest John means many things, but basically it's hard to get someone to engage in a scam without engaging greed. Now with the tortured that's disgusting, it's not greed but he verbally claimed a government payout to the tortured--a pension--ten times higher than the real amount. It's like 230.000 CLP whereas he claimed like 2.200.000[1]. And that's designed to get them to pay him something, very difficult money for a torture victim to earn because their careers are ruined as part of the torture, to keep them down. The torturers advise to steal and impoverish them, never pay back debts. Torture involves bankrupting the victim, it's property crime too. Coerce signatures of course, give up deeds, give up property, give up a car in one case, betray people, betray yourself. But then the torturer tells you the solution is to get a job. Try to get one with that ruined resume though! "Where did you work in April 2009? No good answer? No hire!" [1] Morally that's 10x as much, so he didn't actually quote 10x as much because that's too disgusting, too easy to put that in a newspaper headline, it burns too much. But that's how he got the number, multiply it by ten, and then subtract a meaningless amount strictly in order to reduce hatred against him, which he also did with a nonprofit called Sin Odio, Without Hatred, which was linked to his claims of being a human rights lawyer. My torturers did this too: I was under amnestic drugs from March 29, with a few days on at the beginning, but in total 29 days under amnestics, meaning they give you pills as soon as you awake, all day long, and then you think tomorrow is today, next week is this week, next month is this month. Literally motivating the question, "what year is it?!" Like in time travel movies. But it was less than a month because that's bad PR, saying you tortured someone for a whole month, so they say 29 days, so that I have to say "almost a month" when morally the intention was a full month, minus some meaningless amount to take away the PR sting. Water down the accusation, but if it weren't for the intent to water down the accusation, it would have absolutely been a month! A lunar month, though. And so the reason is they do this to women too, but they menstruate so they know if they've gotten roofied for weeks, unless you shoot the moon, 24/7 amnestics for an entire menstrual period, 29 days, they end up at the same part of their cycle as before the amnestics started, then it's not as obvious.
Dave3of5 4y ago
I think the amount is far too low but charging them is reasonable. Maybe they won't do it again. I suspect with such a low fine they don't care really and they'll just pay it.
t0suj4 4y ago
So is this basically failure of disclosure that they made a quick buck off the crypto craze and attributed that to the gaming market?
- gitfan86 4y ago
  Which is material to investors like me who think that crypto is a house of cards and gaming has long term growth potential
BlueTemplar 4y ago
FYI 5.5 M$ is 1 hour 47 min of Nvidia's revenue and 16 hours worth of net income.
Linda703 4y ago
[dead]
tiku 4y ago
So a GPU made for gaming is used for computing something, and then it is their fault? Would they rule the same if you sell knives for Bushcrafting, but they are using the knives in kitchens? And one could argue that gaming is also rendering / computing / solving problems.
- tehbeard 4y ago
  It's not about how the customer used them. It's about what NVidia told their stockholders in reports. Rather than: "This years growth is fueled by sales to the cryptominer market" (which is a pretty dang volatile market to sell to as a crash will floor nvidia's market with cheap used cards rather than selling overinflated new ones...) They lied and said: "oh yeah no, totes all those gamers buying cards for sick rigs", and the pc gamer market is much more stable, it's predictable, you know roughly when / how much of the market will be buying new to replace a card that's now too old/limited. tl;dr they lied about who they were selling to, because the volatility (no guarantee of that market still existing in a year or two's time) would make shareholders understandably nervous.
  - dangerface 4y ago
    I have seen several people claim nvidia lied and was telling investors that their increase in sales was because of a fortnight boom but I can't find where nvidia allegedly said that. It seems like they didn't lie they sold gpu and reported the correct number of gpu sold. The only claim nVidia made was that it marketed these cards to gamers which the SEC acknowledges they did, this isn't a lie.
    - tehbeard 4y ago
      Maybe, read the brief in the link? > In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. The issue isn't the number of GPU sold, noone's saying they lied about how many they sold or their profit. They lied about the market conditions for that quarter, to make the growth seem "stable", not from a volatile market that could dry up in 2 years or 2 months...
Aissen 4y ago
The settled charged which Nvidia agreed to pay: $5.5M. What they will pay for failing to buy ARM with all this inflated stock cash: $2B.
hexo 4y ago
SEC charges company for not disclosing trade secret. What a shame.
- freemint 4y ago
  As a publicly traded company you have to disclose certain trade secrets. Tough Luck.
techwiz137 4y ago
It's interesting to note that their stock started to take off somewhere in 2014 and exploded in 2017, correlation doesn't mean causation, but it's fits so perfectly with the rise of mining. Well rise of mining is somewhat a misunderstanding, because since I've been a frequent user of cryptocurrency since early 2011, from my point of view that's when GPU mining started but I digress.
duxup 4y ago
Didn't they settle this already? https://www.engadget.com/nvidia-sec-settlement-crypto-mining-gpu-sales-170540661.html https://www.engadget.com/nvidia-sec-settlement-crypto-mining...
- vmception 4y ago
  Yes the dates match up with this article Its old news by a week or week and a half
whatever1 4y ago
I was always wondering why the big players don't just make ASICS for crypto mining that would make happy both the miners (with their faster speeds) and the gamers (who would not have to compete to get a gaming card). But now it is obvious to me. It is better to have in your earnings gpu sales because you can always claim that you expect a steady source of income. If they had 60% of their revenue explicitly from a volatile market like crypto mining, then their stock would not look attractive.
- _-david-_ 4y ago
  Nvidia has a GPU for crypto. I don't think it helped. https://www.nvidia.com/en-us/cmp/ https://www.nvidia.com/en-us/cmp/
  - whatever1 4y ago
    It was just paper released less than a year ago during chip shortage, I doubt that they produced any significant amount of them. Their performance was also luck luster compared to the consumer rtx cards.
peri 4y ago
About damn time, IMO. But as I fix nVidia's bugs, I'm obviously ignorant of anything impacting Serious Cryptographic Engineering.
alangibson 4y ago
I'm pretty content to buy Nvidia on the way down. Their position in the type of silicon that is essential to the future of computing would be very hard to assault.
aj7 4y ago
Now I know how gun manufacturers feel, although I’m not on their side.
jijji 4y ago
How would Nvidia even know what people are doing with the cards they purchase? Thats like saying that Intel should disclose that a large portion of its chips are being used to siphon porn off the network.
bufferoverflow 4y ago
I don't see how it's Nvidia's job to track how their products are used exactly.
- colonelxc 4y ago
  They don't have to. The problem is that they said to investors repeatedly, "Sales are up due to increase in gaming demand", when they actually knew that a signficant portion of the increase was due to cryptomining. So what the SEC is fining them for is lying to investors. If nvidia didn't know how much of their sales were to cryptomining, then there would be no fine. If they did know, and did share that in their reports, there would be no fine.
- JamesBarney 4y ago
  It is their job not to mislead investors about how their products are used. This is not a fine for "You didn't know how your product was being used" but "you knew it was being used for crypto but reported to investors that it being was gaming"
zmmmmm 4y ago
While this seems like something the SEC should indeed be paying attention to, it pales into comparison with Elon Musk openly breaking every rule in the book on Twitter while they do absolutely nothing (up to and including directly pumping and dumping stock ...)
- elevenoh 4y ago
  What actual rules did elon break?
elevenoh 4y ago
What a perverse incentive racket the SEC is
faangiq 4y ago
No bonus clawbacks, no care.
heywoodlh 4y ago
This a little off-topic, but is there any sort of solution to crypto miners intercepting gaming GPUs? As a gamer, part of me gets annoyed that crypto-miners make it more difficult to get gaming GPUS. On top of that, the massive energy consumption caused by crypto mining feels excessive. But the freedom-loving part of me feels uncomfortable with solutions meant to prevent gaming GPUs from being used for crypto mining (let me use my hardware however I want). Is there some sort of better, arm-chair-expert compromise?

407 points by taubek 4y ago

"The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining. The SEC’s order finds that NVIDIA violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. The order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC’s findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty."

Lukineus 4y ago
> "NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty." Cost of doing business.
- hef19898 4y ago
  Yes, on the other hand not being called out by the SEC for insufficient disclosures helps with investor trust.
- ekianjo 4y ago
  thats pocket money for nvidia
- H8crilA 4y ago
  More like the SEC lacked evidence that this was intentional. Remember about the SEC whistleblower program, if you had inside proof of intent the fine would be a lot higher, and you'd get a share of the fine!
  - Melatonic 4y ago
    Wait seriously? What kind of percentage do you get? That is.....both interesting and terrifying in a way
    - smnrchrds 4y ago
      10% to 30%. https://www.sec.gov/whistleblower https://www.sec.gov/whistleblower
- JumpCrisscross 4y ago
  This sets the stage for shareholder lawsuits, which are better equipped to assess actual damages.
- nullc 4y ago
  Many of these actions are specifically geared to tee off civil lawsuits, so the total cost can be significantly greater.

sedeki 4y ago

What's the rationale behind this omission on NVIDIA's part?

synu 4y ago
Presumably that the fine will be much, much less than whatever the value of the benefit is that they earned from the omission.
- infinityio 4y ago
  The fine was ~$5M, nvidia made ~$10B last year - It's approximately equivalent to the amount of money they make in 4 hours
blihp 4y ago
Minimizing the perception of downside risk in sales when it dries up to keep share prices higher than they otherwise would be. Had they come out and said approximately X% of a given quarter's sales were mining related, it would have most likely been priced into the stock as cyclical sales with a lower resulting multiple. edit: this is an old story see previous discussion https://news.ycombinator.com/item?id=31284952 https://news.ycombinator.com/item?id=31284952
- Out_of_Characte 4y ago
  Thats still strange as the lowered gaming sales are partly due to increasing prices from crypto miners and higher material costs. Their profit margin and sales only grew larger during this time
  - Sakos 4y ago
    The point is that it's unreliable income. The cryptomarket can crash, which will have an effect on future earnings. If nVidia isn't open about how much of their revenue is at risk, investors can't make informed decisions about investing in nVidia.
4y ago

senko 4y ago

duplicate: https://news.ycombinator.com/item?id=31284952 https://news.ycombinator.com/item?id=31284952

YedrickTheYeti 4y ago

Wouldn’t this have been obvious to anyone trading in nvidia shares though?

deleted 4y ago
[deleted]

DeathArrow 4y ago

The punishment should be proportional with the sales for cryptomining which they lied about. Investors can be seriously affected by this. A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it.

thathndude 4y ago
Agreed. I was invested in NVDA during this period. Should look back and see how the stock performed during the relevant period.
runeks 4y ago
I’m curious: how difficult would it be to win a suit against Nvidia with this SEC charge in hand?
mbesto 4y ago
> Investors can be seriously affected by this. > A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it. Ok so tell me precisely how much NVDA benefited by not disclosing how much sales were to crypto? I'm a NVDA stock holder and I just don't see what the fuss is. It's been impossible to buy a Nvidia card over the last 3 years due to scalpers and crypto farmers. I guess I thought everyone kinda knew that?
- birracerveza 4y ago
  The problem seems from stem from the fact that if NVDA disclosed that crypto amounted to 5% of their market when instead it's 5 times as much (random numbers for the sake of the example), investors are bound to suffer more in case of a crypto market crash, because the crypto exposure is much higher than what was disclosed by the company.
  - mbesto 4y ago
    > investors are bound to suffer more in case of a crypto market crash Do we know that actually? There was already outsized demand (demand > supply) for Nvdia GPUs to the extent that consumers literally couldn't buy GPUs for ~2 years (still is a problem) without buying from a scalper. A few things to consider: (1) In most markets where demand outpaces supply, new entrants emerge. That is almost impossible to do in GPUs due to compatibility/support. So we've had pent up demand in that market. (2) Consumers waited for supply to catch up to make the purchase even though they were ready to purchase. (3) AFAIK there was no surcharge implemented by NVDA and this value was captured by scalpers. In fact, the price for performance ratio for the latest series of NVDA GPUs was so good that even if crypto wasn't a thing many consumers were ready to replace their old GPU. (4) Crypto focused demand is a leading indicator of sales for that channel. With the shift to PoS, the overall demand for crypto rigs could shutter overnight. My theory (as an NVDA investor) is that sales wouldn't falter because they were already selling products as fast as physically possible due to supply constraints. The question then therefore is what is the forecast 2-5 years out? NVDA is IMO heavily diversified in markets that have long term plays that easily could substitute any dip in consumer GPUs due to less demand from crypto. TL;DR - I think people are overthinking this and if you don't have any idea of how to calculate what a meaningful penalty should be (i.e. "well the company was set to gain X amount of profit due to their infraction") then it's hard for me to take the argument seriously that $5M "isn't enough".

Traster 4y ago

This is kind of funny because the SEC is basically saying Nvidia held their share price artificially high by doing this, but Nvidia also bought back billions of their own shares, by this logic they were overpaying.

kgwgk 4y ago
Securities fraud squared!
spupe 4y ago
Stock buybacks also increase stock prices, and a lot of companies are doing it lately.
projektfu 4y ago
That is a separate issue. Stock buybacks can be done to reward insiders. A dividend would be distributed equally and has the effect of directly cutting the share price. A buyback distributes cash unequally and puts upward pressure on share prices. Only insiders know for sure if the action is being done to buy back shares on sale or to distribute profits.
- rileymat2 4y ago
  > and puts upward pressure on share prices I am curious if there is evidence for this. I don’t see how distributing capital that could be used for growth pressures share prices up. People not selling back the shares are trading the current profits for a bigger share of future profits, which may never exist. So I am not sure on a risk adjusted discounted cash flow model there is any justification for increased price pressure. I always presumed that the main benefit of buybacks v dividends was being able to time capital gains for tax purposes. But this is all speculation too, no evidence behind my post.
  - projektfu 4y ago
    There are two reasons in my mind why buybacks are different. The first is that buybacks are reported after the fact and do not directly alter the share price, rather they increase competition for the available shares and reduce dilution. Dividends immediately reduce the share price by the dividend although the price often moves up a little before the ex-dividend rate. The other reason is that there are very few stocks that are being valued by the market on any sort of model. That goes for cash flow models as well as other things like PE ratios, etc. We are in the tinkerbell regime, prices went up over the last 10 years because people are clapping louder. Obviously that is a controversial take but I am not predicting a reversal, just saying that the market overall is in a weird place.

mcv 4y ago

I don't quite get this. Was it not blatantly obvious to everybody that Nvidia's sales were largely driven by cryptominers? Did they specifically market to cryptominers and lie about that or something? I don't quite get what they did wrong. What's also baffling to me is how their share price is taking a nosedive because of this news. Any investor should know about this. And $5 million fine doesn't sound like enough to hurt the company that much. But if it's true that they misled investors, does that mean that investors can get their money back or something? It seems like any investor who wasn't aware of this is now screwed twice.

cormacrelf 4y ago
Not putting “blatantly obvious” things in the disclosure documents is WORSE than omitting obscure things. The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover. The prospectus regime for public companies is there to protect ordinary investors who do not know this stuff. The overall effect is to increase the “smartness of money” by avoiding people investing who do not know this basic stuff. And yes there is a robust regime for investors to sue for defrauding them in this fashion.
- dhzhzjsbevs 4y ago
  The more I learn about finance the more I'm confused how 2008 actually happened. We actually have some pretty good regulations in place.
  - cormacrelf 4y ago
    A lot of it is designed really well but squashing human stupidity on the scale of trillion dollar economies is a perpetual game of whack-a-mole. The message a lot of people got from 2008 that it was the bankers and the system that hurt the little guy and therefore we should no longer trust any of it. And create a new financial parallel universe in which to rediscover why regulation is needed in the first place. Vitalik Buterin today literally suggested an analogue of FDIC insurance for cryptocurrency banks. My view is that the banks did hugely mess up and did not face enough consequences — and the correct approach is to massively enhance enforcement. (In many ways that actually has happened.) But moreover they preyed on stupidity, just massive massive stupidity that will always be there to contend with. Fraud always looks better than real investments to the marks. People have to overlook the shady parts, and to make them do that a product must offer unrealistic returns. Millions and millions of people are not smart enough to tell when that’s happening to them. As long as the SEC and its ilk let these run, people get hurt and everyone suffers, either personally, or from the inefficiency of fraud generally or the collapse of interlinked financial systems when the fraud gets big enough. Dealing with this is a huge task and often unpopular. If you tell millions of Americans they can’t invest in crypto scams, many of them will be royally pissed off, because they were promised riches! That’s even worse than whack-a-mole — letting frauds off the leash for one minute leaves your hands tied unless you are top of your game and have a lot of built up trust. That’s why people keep pointing to the lack of arrests as a huge failure of 2008. As mistakes by government go it was much worse than the bailout, which was rather necessary to limit the damage. It meant people thought the government was in on it, or that they didn’t care. Frankly I think Bitcoin would never have taken off if there were a slew of high profile arrests. It would not have seemed necessary.

omega3 4y ago

I think the gist is that they’ve intentionally misled investors by misclassification of sales from more violative, unpredictable crypto into stable pc gaming market.

voxic11 4y ago
There is nothing in this Press Release which indicates the SEC thought nvidia's failures were intentional.

Havoc 4y ago

This is a non story. They missed something in the laundry list of legal disclosures that goes in the financials. Nobody ever looks at those since they’re a useless shotgun approach covering everything short of zombie apocalypse.

freemint 4y ago
This is very much not just missing a laundry list of legal disclosures. They actively lied to investors said increased sales of consumer graphic cards was due to a "Fortnite Boom" when it obvious to industry observers that is was a mining boom. Miners and Fortnite players have very different life-time revenue expectation, miners tend flood the used market with used cards dropping the prices that can be asked for future products, gamers tend to keep their cards and buy new cards when they want to play more demanding games. This leads to less of oversupply on the used market. The last mining bust had a huge negative influence on Nvidia.

_jab 4y ago

I'm confused about why this matters. From anecdotal experience, Nvidia seems to be struggling to meet demand for its products right now anyways. It's hard to tell, but I assume that even if crypto took a major hit, Nvidia could still sell a good chunk of its newfound supply to genuine gamers instead. Alternatively, they could invest more into their ML-focused chips instead, which are also supply constrained. Granted, this might not have been true in 2018, which appears to be what the SEC's charge is focused on. Nonetheless, I don't think the huge amount of demand from crypto for Nvidia's products should be construed as a bad thing; there's plenty of other demand.

Tuna-Fish 4y ago
Companies are not allowed to lie to their investors. Part of the deal of being a public company is that all communication is communication with their investors. If they told their investors that they were selling GPUs to gamers, while in fact selling most of them to miners, they violated the law. The principle of it being that said investors might have had a different outlook on the company depending on who they were selling to. Besides, there is a difference. Because whenever crypto collapses (and it has twice already in the past), a lot of the existing mining GPUs end up on the secondary market. If this happens now, it will have a material impact on the prices of GPUs going forwards.
- mschuster91 4y ago
  On the other hand, NVIDIA does not have legal authority to control where its GPUs actually end up being used (nasty things like drivers shutting down when detecting virtualizations aside). How can anyone prove or disprove that a specific percentage of GPUs end up in a specific market, as long as NVIDIA can prove they have kept their usual delivery targets towards wholesale distributors?
  - dematz 4y ago
    This is a good question. I remember having to give my identity before walking out of a store with a computer with a GPU in it, and if someone really wanted to buy multiple GPUs for mining that wouldn't stop them. The SEC lists some facts suggesting nvidia thought they were ending up mining (https://www.sec.gov/litigation/admin/2022/33-11060.pdf https://www.sec.gov/litigation/admin/2022/33-11060.pdf): "NVIDIA launched a product line of cryptomining processors, known as “CMP,” which the company marketed to large cryptomining operations ... Based on known CMP sales, the company identified cryptomining as a significant element of the OEM GPU sales" "NVIDIA also received information indicating that cryptomining was a significant factor in year-over-year growth in NVIDIA’s Gaming GPUs revenue. Some of the company’s sales personnel, in particular in China, reported what they believed to be significant increases in demand for Gaming GPUs as a result of cryptomining" These were the 2 most concrete points to me - management was aware miners drove up GPU prices for gamers and saw it as another big market to capture, and sales attributed increased demand to miners. The rest of it basically says crypto grew, nvidia sales grew, and nvidia thought sales grwe because of crypto. Honestly, I'm not sure it's possible even knowing these factors to know who really bought the GPUs or where they really ended up, but idk all the SEC probably cares about is nvidia not disclosing material seeming information.

twirlock 4y ago

lvl102 4y ago

I remember I was short the stock via puts quite a bit and they kept saying crypto was 5% of the business which I knew was a lie. It turned out great for me. Fast forward to 2022, you see how much of the GPU “shortage” was due to crypto mining especially in Russia (there are enough anecdotes of people in Siberia heating their kitchens with GPUs).

daniel-cussen 4y ago
Right so using waste heat that way is more ecological.
- wffurr 4y ago
  If only the computing hardware generating that waste heat was doing something useful like serving funny cat pictures.
- IAmEveryone 4y ago
  I have some doubts that any significant amount of cryptomining is actually done in Siberia. Part of that would include a few questions of the definition of “Siberia”, a deep examination (i. e. a suggestion to google) people’s ideas of the weather condition at that hypothetical place, and maybe a comparison of efficiency of heating a typical rural Russian home with coal vs. burning coal to generate electricity to run GPUs, after transmission over sowjet-era grids. Considering how cryptocurrencies seem to attract the get-rich-quick crowd, it’s impressive to see the levels of motivated reasoning they are capable of, since neither motivation nor reasoning alone seem to be among their usual strengths.
- varenc 4y ago
  If and only if you would have used electrical heating anyway, then using a GPU's waste heat for heating your home is one of the best things you can do with it and it's "100% efficient". That is, 100% of all the energy your GPU consumes also ends up as heat in your house and it's thermodynamically equivalent to any other type of resistive electric heater. Of course, the energy consumed by any even semi-serious mining operation far exceeds a home's heating needs.

deleted 4y ago

[deleted]

t_mann 4y ago

It's kind of strange/funny how much trouble too much demand can cause for a company.

dangerface 4y ago

Is the sec concern trolling nvidia? What do they mean by impact? > the sale of its graphics processing units (GPUs) designed and marketed for gaming SEC recognises that these cards where marketed to gamers and even recognise that the parts of NVIDIA marketed toward crypto mining was reported as crypto mining. It seems like nvidia did business as usual and the real problem is those filthy gamers that aren't gaming. If NVIDIA reported its gaming cards to SEC as crypto cards, now that the crypto market is dead and those cards are being used for gaming would SEC still consider NVIDIA to be in the wrong for their undisclosed impact on gaming? Seems like SEC is mad at gamers for making money instead of gaming and they are taking it out on NVIDIA. Im just glad some one is standing up to these filthy gamers.

Sakos 4y ago
> In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining. > “NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,
Sakos 4y ago
> Seems like SEC is mad at gamers for making money instead of gaming and they are taking it out on NVIDIA. Im just glad some one is standing up to these filthy gamers. 1) Weird of you to add everything after your first sentence without indicating you edited your comment. 2) I have no idea what you're talking about. This isn't about nVidia reporting their cards as crypto cards. This is about nVidia not reporting what portion of their revenue is subject to volatility in the cryptomarket. SEC isn't mad about anything. It sounds like you're mad, tbh, and I'm not sure why.

daniel-cussen 4y ago

This is true. I met a prince once, named Mikhail von und Zu Lichtenstein Oyarzún. Weird fucking guy, but that's how princes are, I didn't judge. But then lo and behold he traveled to Spain, a country which recognizes nobility, and tried arrogancing his way into a party (like "what do you mean I'm not on the list!?"). The press asked who the fuck is he, asked his parents, his parents weren't his parents, his parents had no idea who the fuck he was. Said as much publicly. "I have no fucking idea who this asshole is" said his father. And then he was on TV in 2017 or 2018 as the world-class bullshitter of all time, but with much contempt. He had hours of talk-shows just for him, his law school professor going in front of the camera saying what he did was illegal because he pretended to have authority. He was a scammer, in particular he posed as a human-rights lawyer targeting victims of torture to get their secrets and extort them. Tried to do it to me, but you can't con an honest John. So what happened, going back to your point? He brainwashed himself, told himself he was a prince 10 million times. But lied to himself literally 10 million times.

alisonkisk 4y ago
> He was a scammer, in particular he posed as a human-rights lawyer targeting victims of torture to get their secrets and extort them. Tried to do it to me, but you can't con an honest John. You are calling victims of tortures liars?
- daniel-cussen 4y ago
  - daniel-cussen 4y ago
    EDIT: You're right I did in fact say victims of torture are liars, at least it can be read that way! Wow, didn't realize it, didn't intend it. So I don't know what he was saying to the others, but he set up many many scams like talking really loud on his cell about "an opportunity going to waste" when we met at Metro el Golf staircase, trying to get me to ask on my own accord what that opportunity was, but I had no curiosity for it. So helping me with torture, I fell for it a bit, but it was something I could not fail to want. So honest John means many things, but basically it's hard to get someone to engage in a scam without engaging greed. Now with the tortured that's disgusting, it's not greed but he verbally claimed a government payout to the tortured--a pension--ten times higher than the real amount. It's like 230.000 CLP whereas he claimed like 2.200.000[1]. And that's designed to get them to pay him something, very difficult money for a torture victim to earn because their careers are ruined as part of the torture, to keep them down. The torturers advise to steal and impoverish them, never pay back debts. Torture involves bankrupting the victim, it's property crime too. Coerce signatures of course, give up deeds, give up property, give up a car in one case, betray people, betray yourself. But then the torturer tells you the solution is to get a job. Try to get one with that ruined resume though! "Where did you work in April 2009? No good answer? No hire!" [1] Morally that's 10x as much, so he didn't actually quote 10x as much because that's too disgusting, too easy to put that in a newspaper headline, it burns too much. But that's how he got the number, multiply it by ten, and then subtract a meaningless amount strictly in order to reduce hatred against him, which he also did with a nonprofit called Sin Odio, Without Hatred, which was linked to his claims of being a human rights lawyer. My torturers did this too: I was under amnestic drugs from March 29, with a few days on at the beginning, but in total 29 days under amnestics, meaning they give you pills as soon as you awake, all day long, and then you think tomorrow is today, next week is this week, next month is this month. Literally motivating the question, "what year is it?!" Like in time travel movies. But it was less than a month because that's bad PR, saying you tortured someone for a whole month, so they say 29 days, so that I have to say "almost a month" when morally the intention was a full month, minus some meaningless amount to take away the PR sting. Water down the accusation, but if it weren't for the intent to water down the accusation, it would have absolutely been a month! A lunar month, though. And so the reason is they do this to women too, but they menstruate so they know if they've gotten roofied for weeks, unless you shoot the moon, 24/7 amnestics for an entire menstrual period, 29 days, they end up at the same part of their cycle as before the amnestics started, then it's not as obvious.

Dave3of5 4y ago

I think the amount is far too low but charging them is reasonable. Maybe they won't do it again. I suspect with such a low fine they don't care really and they'll just pay it.

t0suj4 4y ago

So is this basically failure of disclosure that they made a quick buck off the crypto craze and attributed that to the gaming market?

gitfan86 4y ago
Which is material to investors like me who think that crypto is a house of cards and gaming has long term growth potential

BlueTemplar 4y ago

FYI 5.5 M$ is 1 hour 47 min of Nvidia's revenue and 16 hours worth of net income.

Linda703 4y ago

[dead]

tiku 4y ago

So a GPU made for gaming is used for computing something, and then it is their fault? Would they rule the same if you sell knives for Bushcrafting, but they are using the knives in kitchens? And one could argue that gaming is also rendering / computing / solving problems.

tehbeard 4y ago
It's not about how the customer used them. It's about what NVidia told their stockholders in reports. Rather than: "This years growth is fueled by sales to the cryptominer market" (which is a pretty dang volatile market to sell to as a crash will floor nvidia's market with cheap used cards rather than selling overinflated new ones...) They lied and said: "oh yeah no, totes all those gamers buying cards for sick rigs", and the pc gamer market is much more stable, it's predictable, you know roughly when / how much of the market will be buying new to replace a card that's now too old/limited. tl;dr they lied about who they were selling to, because the volatility (no guarantee of that market still existing in a year or two's time) would make shareholders understandably nervous.
- dangerface 4y ago
  I have seen several people claim nvidia lied and was telling investors that their increase in sales was because of a fortnight boom but I can't find where nvidia allegedly said that. It seems like they didn't lie they sold gpu and reported the correct number of gpu sold. The only claim nVidia made was that it marketed these cards to gamers which the SEC acknowledges they did, this isn't a lie.
  - tehbeard 4y ago
    Maybe, read the brief in the link? > In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining. Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance. The issue isn't the number of GPU sold, noone's saying they lied about how many they sold or their profit. They lied about the market conditions for that quarter, to make the growth seem "stable", not from a volatile market that could dry up in 2 years or 2 months...

Aissen 4y ago

The settled charged which Nvidia agreed to pay: $5.5M. What they will pay for failing to buy ARM with all this inflated stock cash: $2B.

hexo 4y ago

SEC charges company for not disclosing trade secret. What a shame.

freemint 4y ago
As a publicly traded company you have to disclose certain trade secrets. Tough Luck.

techwiz137 4y ago

It's interesting to note that their stock started to take off somewhere in 2014 and exploded in 2017, correlation doesn't mean causation, but it's fits so perfectly with the rise of mining. Well rise of mining is somewhat a misunderstanding, because since I've been a frequent user of cryptocurrency since early 2011, from my point of view that's when GPU mining started but I digress.

duxup 4y ago

Didn't they settle this already? https://www.engadget.com/nvidia-sec-settlement-crypto-mining-gpu-sales-170540661.html https://www.engadget.com/nvidia-sec-settlement-crypto-mining...

vmception 4y ago
Yes the dates match up with this article Its old news by a week or week and a half

whatever1 4y ago

I was always wondering why the big players don't just make ASICS for crypto mining that would make happy both the miners (with their faster speeds) and the gamers (who would not have to compete to get a gaming card). But now it is obvious to me. It is better to have in your earnings gpu sales because you can always claim that you expect a steady source of income. If they had 60% of their revenue explicitly from a volatile market like crypto mining, then their stock would not look attractive.

_-david-_ 4y ago
Nvidia has a GPU for crypto. I don't think it helped. https://www.nvidia.com/en-us/cmp/ https://www.nvidia.com/en-us/cmp/
- whatever1 4y ago
  It was just paper released less than a year ago during chip shortage, I doubt that they produced any significant amount of them. Their performance was also luck luster compared to the consumer rtx cards.

peri 4y ago

About damn time, IMO. But as I fix nVidia's bugs, I'm obviously ignorant of anything impacting Serious Cryptographic Engineering.

alangibson 4y ago

I'm pretty content to buy Nvidia on the way down. Their position in the type of silicon that is essential to the future of computing would be very hard to assault.

aj7 4y ago

Now I know how gun manufacturers feel, although I’m not on their side.

jijji 4y ago

How would Nvidia even know what people are doing with the cards they purchase? Thats like saying that Intel should disclose that a large portion of its chips are being used to siphon porn off the network.

bufferoverflow 4y ago

I don't see how it's Nvidia's job to track how their products are used exactly.

colonelxc 4y ago
They don't have to. The problem is that they said to investors repeatedly, "Sales are up due to increase in gaming demand", when they actually knew that a signficant portion of the increase was due to cryptomining. So what the SEC is fining them for is lying to investors. If nvidia didn't know how much of their sales were to cryptomining, then there would be no fine. If they did know, and did share that in their reports, there would be no fine.
JamesBarney 4y ago
It is their job not to mislead investors about how their products are used. This is not a fine for "You didn't know how your product was being used" but "you knew it was being used for crypto but reported to investors that it being was gaming"

zmmmmm 4y ago

While this seems like something the SEC should indeed be paying attention to, it pales into comparison with Elon Musk openly breaking every rule in the book on Twitter while they do absolutely nothing (up to and including directly pumping and dumping stock ...)

elevenoh 4y ago
What actual rules did elon break?

elevenoh 4y ago

What a perverse incentive racket the SEC is

faangiq 4y ago

No bonus clawbacks, no care.

heywoodlh 4y ago

This a little off-topic, but is there any sort of solution to crypto miners intercepting gaming GPUs? As a gamer, part of me gets annoyed that crypto-miners make it more difficult to get gaming GPUS. On top of that, the massive energy consumption caused by crypto mining feels excessive. But the freedom-loving part of me feels uncomfortable with solutions meant to prevent gaming GPUs from being used for crypto mining (let me use my hardware however I want). Is there some sort of better, arm-chair-expert compromise?