The legal representatives of technology company Nvidia have argued that its investors are not entitled to access its internal records about the “crypto craze” of 2017 and 2018.
During a trial in the United States' Delaware Court of Chancery on Sept. 17, Nvidia's counsel argued that the plaintiffs have failed to show a “credible basis” for why Nvidia should be compelled to hand over the requested company documents.
Nvidia is facing a class-action lawsuit alleging that it misled investors as to how much its revenue relied on crypto miners buying its graphics processing units amid the 2017 bull run.
Patrick Gibbs of Cooley LLP criticized the plaintiffs’ decision to “rest on a paper record” at trial without offering live testimony as to their purpose for demanding that Nvidia hand over its internal documents. He also argued that evidence has been presented proving that the investors behind the suit currently own stock in Nvidia and thus maintain an interest in the suit.
The court advised both parties to submit post-trial briefings addressing Nvidia's argument for why it should not hand over its internal records.
The lawsuit alleges that Nvidia made “false and misleading public statements concerning the company’s internal controls, prospects, and earnings.” The suit also levies accusations that Nvidia simultaneously sold $147 million worth of its shares “at artificially inflated prices.”
The investors allege that after launching its GPU dedicated to cryptocurrency in May 2017, the Crypto SKU, Nvidia solely attributed the sales of the SKU to miners to demand from miners.
Additionally, the plaintiffs estimate that $1 billion worth of the company’s popular GeForce GPU sales that Nvidia claims were purchased by gamers in 2017 were actually purchased by crypto miners.
After the crypto bubble popped and demand from miners began to dry up, Nvidia’s struggled to offload its GPU inventories and saw a 30% crash in its stock price by the end of 2018.