- The Supreme Court’s decision on Nvidia’s case could set an example, leading to an increase in securities lawsuits.
- The lawsuit alleges Nvidia misled their investors downplaying its GPU sales to crypto miners.
The U.S. Supreme Court is set to hear a legal dispute between chipmaker Nvidia and a class of its investors. This is a case that could have significant implications for the cryptocurrency industry. The Digital Chamber (TDC), warns that allowing this lawsuit could open the door to “frivolous securities lawsuits” targeting the crypto sector.
The lawsuit, filed in 2018, alleges that Nvidia misled investors by downplaying the extent of its GPU (graphics processing units) sales to cryptocurrency miners. The petition claims that Nvidia’s CEO, Jensen Huang, publicly minimized the company’s reliance on crypto miners for its sales. Nvidia missed Wall Street’s earnings expectations and lost $23 billion dipping around 18% in the company’s stock price.
This later became apparent when both the crypto market and Nvidia’s financial results declined one after the other. The case was initially dismissed but was revived by an appellate court last August, leading Nvidia to seek a reversal from the U.S. Supreme Court.
Also, in an amicus brief submitted on August 20, TDC supported Nvidia’s appeal to the Supreme Court. TDC argued that the lawsuit is based on an expert opinion that relies on “unsupported assumptions and inferences”. It contends that, plaintiffs failed to provide any specific documents to back up their claims. It is setting example for similar lawsuits in the future.
TDC Warns of Potential Impact on Crypto Industry
Furthermore, Perianne Boring, TDC’s founder and CEO, stated that it could lead to a surge in unfounded securities lawsuits against companies in the high-growth, volatile cryptocurrency industry.
The lawsuit is also laid on the standards set by the Private Securities Litigation Reform Act of 1995 (PSLRA). Under the PSLRA, plaintiffs must identify each misleading statement, explain why it’s misleading, and provide supporting facts. Further, TDC argues that the lawsuit against Nvidia does not meet these stringent requirements.
Moreover, TDC is represented in this case by legal experts from Wiley Rein LLP, who have emphasized the importance of this case in protecting the crypto industry. Finally, as the case moves forward, the crypto industry is closely watching the outcome, which could influence the effects of how laws are applied to emerging technologies.
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