Seven years ago, investors filed a lawsuit against Nvidia (NASDAQ: NVDA) for failure to disclose just how intertwined its business was with the digital asset sector. Now, the United States Supreme Court has ruled that the case should proceed, denying the chipmaker’s motion to dismiss.
In a brief statement, the Supreme Court of the United States (SCOTUS) ruled that it had dismissed the motion as “improvidently granted.” In legal lingo, this means that the judges decided the motion shouldn’t have been brought to the top court in the first place.
It wasn’t much of a surprise; when Nvidia and the investors argued their cases in November, some of the judges questioned why the case had been brought to them. They opined that the crux of the dispute was over the facts of the case, not a legal conundrum that required their decision.
“It just seems to me that you’re asking us to engage in a kind of analysis that we are not very good at and weren’t expecting when we took this case,” Justice Elena Kagan told Nvidia’s legal team in mid-November.
Another judge, Justice Ketanji Brown Jackson, stated that Nvidia was trying to force the investors to produce their evidence too early in the legal battle, and SCOTUS would not be involved in the arm-twisting.
Nvidia accepted the ruling but criticized the top court for not outlining the reasons behind the decision.
“We would have preferred a decision on the merits affirming the trial court’s dismissal of the case, but we are fully prepared to continue our defense. Consistent and predictable standards in securities litigation are essential to protecting shareholders and ensuring a strong economy, and we remain committed to supporting them,” Nvidia’s spokesperson John Rizzo said in a statement to media outlets.
It all stems from a lawsuit filed by investors in 2018, led by Swedish investment firm E. Ohman J:or Fonder AB. They alleged that Nvidia had lied about the extent to which its chip sales to digital asset miners accounted for its overall revenue. When ‘crypto’ prices crashed, Nvidia’s GPU sales followed suit, as did its stock price, which shed 30% in a two-day span.
The California-based giant fought back, alleging that the investors relied on fabricated information, and for a few years, it seemed like the chipmaker had ducked the bullet. However, three months ago, the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) got involved, backing the investors’ claim.
The SEC has already gone after Nvidia for its ‘crypto’ ties. In 2023, the company paid $5.5 million to the watchdog to settle a lawsuit against it for the same allegations. However, it didn’t admit or deny any wrongdoings.
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” SEC’s digital assets unit head Kristina Littman said at the time.
Nvidia has moved on significantly since, and today, it almost entirely focuses on artificial intelligence (AI). With the sector becoming one of the fastest growing in recent history, the chipmaker has been riding the wave to a $3.4 trillion market capitalization, which is only bettered by Apple (NASDAQ: AAPL).
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