The legal representatives of tech company Nvidia have argued that its investors are not entitled to access its internal records regarding the “crypto craze” of 2017 and 2018.
In a September 17 court hearing in Chancery, Delaware, lawyers for Nvidia argued that the plaintiffs have failed to show a “credible basis” for why Nvidia should be forced to turn over the requested company documents.
Nvidia is facing a class action lawsuit alleging that it misled investors about the extent to which its revenue depended on crypto miners buying its graphics processing units during the bull market of 2017.
Patrick Gibbs of Cooley LLP criticized the plaintiffs’ decision to “stay on a paper record” at trial without providing live testimony on the purpose of their request for Nvidia to turn over internal documents. He also argued that there was evidence that the investors behind the lawsuit currently owned Nvidia stock and therefore maintained an interest in the lawsuit.
The court recommended that the parties file post-trial briefs addressing the argument as to why Nvidia should not turn over its internal records.
The lawsuit alleges that Nvidia made “false and misleading public statements about the company’s internal controls, prospects and earnings.” The lawsuit also levies charges that Nvidia simultaneously sold $147 million worth of stock “at an artificially inflated price.”
Investors allege that after launching Crypto SKU, a cryptocurrency-specific GPU, in May 2017, Nvidia attributed the sale of the SKU solely to demand from miners.
Moreover, the plaintiffs estimate that the $1 billion worth of gamers’ purchases of the company’s popular GeForce GPU sales that Nvidia claimed were made in 2017 were actually purchased by crypto miners.
After the crypto bubble popped, miner demand began to dry up, Nvidia’s difficulty unloading its GPU inventory led to a 30% plunge in its stock price by the end of 2018.