Concealing over $1 billion in mining card income? Nvidia fraud class-action lawsuit approved, investors' claims imminent

Ask AI · What risk considerations are behind Nvidia’s concealed revenue amid the crypto-currency boom?

Our reporter Lu Mengxue from chinatimes.net.cn, Beijing reports

On March 27, U.S. stock market close, Nvidia (NVIDIA), which ranked No. 1 in trading volume, fell 2.17% to close at $167.520.

Accompanying the decline in the share price was a key development in Nvidia’s securities class action lawsuit that has taken nearly eight years. On March 25, 2026, the U.S. District Court for the Northern District of California issued an important ruling, formally approving the investors’ class action against the company while dismissing Nvidia’s motion seeking to exclude the plaintiffs’ loss expert testimony.

This means that global investors who bought Nvidia stock between August 10, 2017 and November 15, 2018 will have the opportunity to seek recovery of investment losses from this GPU giant through a class action lawsuit.

Related lawyers noted that the court’s approval of class certification is an important procedural breakthrough in this case. Taken together, the risk of Nvidia losing this case is extremely high, with the likelihood of concluding with a large settlement being greater than the likelihood of winning.

Class action approved; court rejects defendants’ defenses

The litigation process in this case can be described as full of twists and turns.

As early as 2018, investors filed a lawsuit against Nvidia, accusing it of concealing more than $1 billion in graphics card sales revenue related to cryptocurrency mining. After the case was filed, the court dismissed the lawsuit twice for insufficient evidence of “subjective intent.”

The turning point came in 2023, when the U.S. Ninth Circuit Court of Appeals overturned part of the earlier rulings and reinstated the claims against Nvidia and its CEO Jensen Huang. In July 2025, the plaintiffs formally submitted an application for class certification, which ultimately was approved by the court on March 25, 2026.

The lead plaintiffs in this case are Lannebo Asset Management Company of Sweden and PGB Retirement Fund of the Netherlands. They represent all investors who bought Nvidia’s ordinary shares during the period above, alleging that Nvidia and CEO Jensen Huang violated U.S. securities laws and carried out securities fraud.

In this ruling, the court reached clear conclusions on two core disputes: first, class action standing is approved. The court formally approved the plaintiffs’ class certification application, allowing the case to proceed in a class format for trial; second, the expert loss model is usable. Nvidia had attempted to exclude testimony from the plaintiffs’ loss expert, Joseph R. Mason, arguing that its “actual out-of-pocket loss” model was unreliable. The court held that the event study method used by Dr. Mason combined with the loss model is a widely recognized calculation method in U.S. securities litigation. The court found that it had clearly explained the data sources and analysis path and met the model-reliability requirements at the class action stage. This means that Nvidia’s defense on this point was rejected.

Liang Xiangfang, Executive Director and Partner at Shanghai Meigu Law Firm, told reporters from the 华夏时报 that Nvidia booked mining graphics card revenue into its gaming business, which is “not industry practice,” and that it “constituted financial violations.” He believes the core issue is that Nvidia “deliberately concealed the proportion of mining revenue, downplayed the company’s reliance on the crypto market, and engaged in false statements and the omission of material information to investors,” which also was the key basis for the U.S. Securities and Exchange Commission (SEC) in 2022 to impose a fine of $5.5 million on it for “not adequately disclosing the impact of mining.”

Mining boom drove inflated revenue; losses are severe after the bubble bursts

The root of this lawsuit began with the cryptocurrency frenzy of 2017.

At the time, cryptocurrency prices, represented by Ethereum, surged dramatically, triggering a global “mining” boom. Nvidia’s GeForce series gaming graphics cards, due to their powerful computing capabilities, became the “mining rigs” that miners competed to buy, causing the market to be, for a time, “short on cards.”

In response to this windfall, Nvidia launched a Crypto SKU product line specifically for cryptocurrency mining and allocated its revenue to the “OEM (original equipment manufacturer) segment,” rather than the core “gaming segment.” This approach planted a seed for later controversy.

The plaintiffs alleged that between August 10, 2017 and November 15, 2018, Nvidia and CEO Jensen Huang continuously issued misleading information to the market, deliberately downplaying the company’s reliance on cryptocurrency mining business.

First, it underestimated scale. Nvidia claimed that cryptocurrency-related revenue was “only several hundred million dollars” and that it accounted for a very small proportion of the company’s business. Second, it muddled the source. Nvidia attributed the surge in gaming segment revenue to “player demand,” rather than “miner procurement.” Third, it misled on structure. Nvidia claimed that revenue related to mining had been “locked in” within the OEM segment, but in fact, nearly two-thirds of such revenue was recorded in the gaming segment.

However, when cryptocurrency prices fell rapidly, the bubble started to burst.

In the spring of 2018, the risks previously concealed集中爆发: the large quantities of graphics cards Nvidia had built up in anticipation of miner demand became heavy inventories that no longer had buyers; inventory piled up severely in gaming channels as well, and prices collapsed.

On August 16, 2018, Nvidia partially acknowledged the facts for the first time during its Q2 earnings call, announcing that it would no longer include crypto revenue going forward, and disclosing that inventories increased by more than 36% quarter-over-quarter—from $797 million to $1.09 billion. During the call, Jensen Huang said, “A large number of miners bought GeForce gaming cards.” That day, Nvidia’s stock price fell 4.9%.

On November 15 of the same year, Nvidia again significantly cut its revenue outlook and admitted that the core reason its performance fell short of expectations was that “after crypto demand sharply declined, the pace at which channel inventories were cleared was far slower than expected.” After the news was released, Nvidia’s share price plunged 28.5% within two trading days.

The plaintiffs pointed out that it was these two disclosures that fully exposed Nvidia’s deception: its gaming business growth depended heavily on unstable mining demand, not purely on player demand; and the company’s so-called “channel management capability” was not real.

Court ruling: three types of statements may be misleading; investors can seek recovery as a class

In this ruling, the court confirmed that three categories of statements by Nvidia and Jensen Huang were alleged to constitute material false or misleading information.

First, it was misleading about scale. Nvidia intentionally understated cryptocurrency-related revenue and downplayed business risks. Second, it was misleading about source. Nvidia packaged miner procurement as gaming demand to embellish the health of its core business; third, it was misleading about structure. Nvidia falsely claimed that most cryptocurrency revenue was concentrated in the OEM segment, concealing the real risk exposure of the gaming segment.

Based on related documents, the key reason class action status was approved in this case is that the court supported the “fraud-on-the-market” principle applied by the plaintiffs. The core of this principle is that, in an efficient securities market, investors trade in reliance on market prices, and market prices reflect all publicly available material information. Therefore, if a company makes a material false statement, it can be presumed to have affected the share price, and investors do not need to prove one by one that they directly “relied” on the false statement.

Nvidia argued that its alleged false statements did not cause the stock price to rise, and that the subsequent stock decline was driven by risks already known to the market and had nothing to do with the false statements. But after hearing the case, the court found the plaintiffs’ logic more convincing: the function of the false statements was not to push the share price higher, but to prevent the share price from falling due to real risks during the bubble period, thereby sustaining the inflated price level. At the same time, the corrective disclosure in November 2018 had a direct causal relationship with the share-price plunge.

“While this ruling approving class certification is an important procedural breakthrough in the case, it is not the same thing as the ultimate outcome of winning or losing.” Lawyer Liu Yang, a partner at Beijing DeHeng Law Offices, told reporters from the 华夏时报 that the final result still needs to go through a full trial. However, judging from the existing information in this case, the tendency of the court’s ruling, and the practical rules of U.S. securities litigation, the risk of Nvidia losing this time is extremely high. The likelihood of resolving the case through a high-value settlement is greater than the likelihood of winning.

Liu Yang pointed out that the court had already issued a ruling highly favorable to the plaintiffs, and that key evidence, such as internal emails, clearly shows that Nvidia executives knew that the company’s stock price would be maintained at a high level due to the relevant false statements. In addition, the U.S. SEC had already imposed a $5.5 million penalty on Nvidia in 2022 for “not adequately disclosing the impact of mining.” This administrative regulatory conclusion would become strong support for the civil lawsuit. From a practical standpoint, once class certification is obtained, the vast majority of cases end in settlement because, “for Nvidia, whose AI business is booming right now, the opportunity cost brought by litigation delays and negative exposure is far higher than the settlement cost. And if it loses at trial, the compensation amount could reach the hundreds of millions to billions of dollars, far exceeding the SEC fine; therefore, settlement is the smarter choice.”

Lawyer Xiangfang Liang also believed that “Nvidia’s likelihood of losing is relatively high.” He reminded that this case has important warning significance for information disclosure by companies in the crypto and AI sectors: first, material business risks must be fully disclosed—truthfully disclose the actual contribution of high-risk businesses to revenue; second, information disclosure must remain real and consistent and must not mislead investors through accounting categorization or vague wording; third, risks behind high growth must be clearly signaled—timely disclose the growth drivers, sustainability, and potential volatility risks to protect investors’ right to know.

Liu Yang believed that the focus of subsequent proceedings will shift from the procedural question of “whether the lawsuit can be advanced in a class format” to the substantive question of “whether Nvidia constitutes securities fraud and what responsibilities it must bear.” First is proof of subjective intent and defenses; second is the determination of materiality—whether Nvidia’s actions of concealing the scale of mining revenue and misleading on revenue sources constitute material information that a reasonable investor would consider when making decisions; third is the argument for causation—whether the share-price plunge was caused entirely by the corrective disclosures; fourth is loss calculation. In addition, settlement will also become the main direction going forward, and the parties will likely negotiate around the settlement amount, the scope of damages, whether additional disclosure and remediation obligations will be attached, and so on.

The case has been scheduled to be heard at 2:00 p.m. U.S. Eastern Time on April 21, 2026.

责任编辑：冯樱子 主编：张志伟