Resumption of Nvidia lawsuit could mean trouble for crypto companies

The Digital Chamber (TDC) has raised the alarm over the US Supreme Court's decision to reopen a lawsuit against Nvidia, warning that it could have serious consequences for the cryptocurrency sector.

2018 lawsuit against Nvidia could put crypto in trouble

The lawsuit, originally filed in 2018, accuses Nvidia of misleading investors about its GPU sales to cryptocurrency miners. The plaintiffs claim Nvidia downplayed over $1 billion in GPU sales related to crypto mining in 2017 and 2018. This controversy followed a significant drop in Nvidia's stock price – nearly 30% – after the company announced in late 2018 that revenue would fall by 7%.

Questionable expert statements

TDC claims that the class action lawsuit against Nvidia was based on an expert opinion based on “unfounded assumptions and conclusions” about the crypto industry and Nvidia's revenues. In this case, the plaintiffs rely on non-evidence-based “expert opinions.” It explains that these opinions, based on general market research and unreliable or hidden assumptions, are insufficient, which undermines the purpose of the PSLRA.

“The impact will be felt most by the most innovative companies, like many in the cryptocurrency industry.” TDC’s members include crypto giants such as Crypto.com, Ripple and Binance.

TDC noted in its facts that the Private Securities Litigation Reform Act of 1995 (PSLRA) was passed by Congress to stem the tide of frivolous lawsuits and provide protection to growing technology companies by imposing stricter requirements on private plaintiffs seeking securities class action lawsuits.

Why is this important?

TDC said in its blog that it was “compelled to voice its opinion due to the risk of further frivolous securities litigation based on nothing more than unfounded negative perceptions of the cryptocurrency industry and its high-growth economic cycle.”

It was stressed that a victory for the plaintiffs would set a dangerous precedent that would allow speculative and baseless claims to succeed in court. This could lead to a flood of pointless lawsuits against companies in the cryptocurrency industry, stifling innovation by burdening them with costly litigation and discouraging investment.

According to TDC, this would undermine the very protections created by the PSLRA to protect emerging technology industries from costly, speculative litigation.

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What do you think? Will the lawsuit be successful?