The Securities and Exchange Commission (SEC) on Friday (May 6) said technology company NVIDIA Corporation in consecutive quarters in fiscal 2018 made “inadequate disclosures concerning the impact of cryptomining on the company’s gaming business,” according to a press release.
The company will pay a $5.5 million penalty and comply with a cease-and-desist order without admitting or denying the findings.
NVIDIA “failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming,” the SEC wrote in its order, referring to NVIDIA’s Forms 10-Q for fiscal 2018, in which the company didn’t disclose that its increase in gaming sales “was driven in significant part by cryptomining,” according to the SEC.
The commission also found that NVIDIA’s omissions “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,” said Kristina Littman, chief of the SEC enforcement division’s crypto assets and cyber unit, in the SEC press release.
The order also found that NVIDIA failed to maintain adequate disclosure controls and procedures.
Related: California Governor Orders Study Into Crypto, Blockchain Regulations
Earlier this week, California Gov. Gavin Newsom signed an executive order to start work on a regulatory framework for blockchain and cryptocurrency companies, which is meant to build on President Joe Biden’s executive order on digital assets, signed on March 9.
That March executive order from the White House initiated a federal government assessment of key issues raised by cryptocurrency assets and financial technologies. Newsom’s order calls on state agencies to work with and report to the federal government to “make California the first state to establish comprehensive regulatory and business environment for crypto assets.”
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