NVIDIA fined USD $5.5 million for hiding how many gaming GPUs were sold to crypto miners

Armenius

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The SEC says it left investors in the dark.

Nvidia will pay $5.5 million to settle charges that it unlawfully obscured how many of its graphics cards were sold to cryptocurrency miners. The US Securities and Exchange Commission announced the charges and a settlement with the company today. Its order claims Nvidia misled investors by reporting a huge boost in revenue related to “gaming,” hiding how much its success relied on the far more volatile crypto market. Nvidia isn’t admitting to wrongdoing as part of the settlement, but it agrees to stop any unlawful failures to disclose information.

The charges stem from Nvidia’s fiscal year 2018 financial reports. The SEC notes Nvidia saw an explosion in crypto mining-related sales in 2017, when the rewards of mining Ethereum grew dramatically. Crypto mining was widely reported as a cause of GPU scarcity, and Nvidia launched a separate CMP line specifically for mining, attempting to prevent shortages for gamers. But employees apparently acknowledged that many gaming GPUs were still going to miners. “The company’s sales personnel, in particular in China, reported what they believed to be significant increases in demand for Gaming GPUs as a result of crypto mining,” the order says.


https://www.theverge.com/2022/5/6/2...rges-fine-settlement-gaming-gpu-crypto-mining
 

LukeTbk

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I wonder if it changed much since 2018.... they now have a Compute & Networking segment that are different than Graphics, to split the crypto but I am not sure how able they are to really know which gpu sales go in which, I could imagine them just putting the mining card into the compute segment.
 

Lakados

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So they settled but weren't found guilty, paying $5.5m to get it off the books looks to be way cheaper than fighting it another year in court. I mean the SEC issued the charges 4 years ago and couldn't make it stick.
Even now if you asked Nvidia how many cards went to miners, outside their mining lineup there's no way of knowing unless EVGA, Gigabyte, MSI, and the likes state how many they sold to miners directly and how many went to retail channels, then the retail channels would need to track what the people they sold to did with them.

Don't get me wrong here they had to know that a lot of their cards went to miners, they aren't stupid, but it's not like they can definitively say, "well Jim, based on the sales figures we received from our partners down channel, they sold 43% of the cards to individuals who intend to use them for mining."
But $5.5M is laughable for a company the size of Nvidia.
 

Lakados

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Do miners actually buy the mining cards? They have like zero resale value.
Professional miners don't care, the big firms with thousands or tens of thousands of cards use them till they don't work then recycle them, it's only the smaller players that would bother trying to sell things on eBay and the likes and they aren't the people Nvidia was aiming at with the CMP lineup
 

Armenius

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"Nvidia isn’t admitting to wrongdoing as part of the settlement, but it agrees to stop any unlawful failures to disclose information."

It might cover the tip...
I mean, they're technically not wrong. You sell product to whomever wants it. I would define the unlawful act of not disclosing data that would affect investors as "wrong," though. Whether or not it was malicious? Can't say, since I don't know if NVIDIA does or is even able to profile every one of their customers to provide that data.
 

Lakados

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So like lunch money for them? Cost of doing business…. If you’re not cheatin’ you’re not tryin’ and all that bullshit.
Not even, this is basically SEC extortion money. The SEC fucked up, can’t prove that Nvidia did anything illegal intentionally but can’t walk away empty handed. So they drop the “give us something so we can make this go away” line.
 

Lakados

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So in order to protect shareholders they fine the company shareholders invested in which directly hurts the shareholders.....
But by getting this off the books and closing the investigation Nvidia no longer has to disclose that they are under SEC investigation which helps the stock prices and helps the shareholders.
 

Zarathustra[H]

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That's a slap on the wrist. Cost of doing business at this level.

Who ever thight that fines smaller than the gains made by doing shady shit would ever deter shady shit?
 

Armenius

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So in order to protect shareholders they fine the company shareholders invested in which directly hurts the shareholders.....
not-about-money.gif
 

DPI

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Not even, this is basically SEC extortion money. The SEC fucked up, can’t prove that Nvidia did anything illegal intentionally but can’t walk away empty handed. So they drop the “give us something so we can make this go away” line.
Bingo. Shakedown was the word that immediately came to my mind as well.

Because the question "How many GPU's went to miners?" is silly, since who defines what a "miner" is? Every kid with Nicehash installed on his gaming PC is a "miner". More than 2 GPU's? More than 8 GPU's? "How many GPU's went to left handed lesbians?"

As well, Nvidia doesn't have visibility of all the downstream activity of their AIB's. Without a doubt MSI, Gigabyte, ASUS etc did some bulk deals that short circuited their regular distribution channels and sold directly to companies that would end up using the GPU's for mining - as is their prerogative. But how does Nvidia track, quantity or ultimately be responsible for that?

And even if Nvidia did have some kind of partial metrics of what every single one of their GPU's is being used for somehow, it's no one's business. There would be no upside to disclosing any of it - it would only be weaponized against them both by their competition and the Clickbait Industrial Complex. The same goes for AMD, Intel or anyone else.
 
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zamardii12

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Even now if you asked Nvidia how many cards went to miners, outside their mining lineup there's no way of knowing unless EVGA, Gigabyte, MSI, and the likes state how many they sold to miners directly and how many went to retail channels, then the retail channels would need to track what the people they sold to did with them.

I don't understand how knowing how many were sold to miners would change anything or help anyone? They only care about selling a product regardless of to who, and what constitutes a "miner?" Someone who bought 100 GPUs? 50? 25? 5? 2? 1? Literally anyone could mine for crypto so who cares? Whether someone bought 1 GPU or a 100 GPUs this just sounds like capitalism at work to me. Supply and demand.

It's like Sony and/or Microsoft being fined for "selling to scalpers" with respect to the PlayStation 5 and Xbox Series X.
 
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Lakados

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I don't understand how knowing how many were sold to miners would change anything or help anyone? They only care about selling a product regardless of to who, and what constitutes a "miner?" Someone who bought 100 GPUs? 50? 25? 5? 2? 1? Literally anyone could mine for this currency so who cares? Whether someone bought 1 GPUs or 100 GPUs this just sounds like capitalism at work to me.

It's like Sony and/or Microsoft being fined for "selling to scalpers."
Well, it matters because the SEC was going after them for not disclosing to investors how many of their cards went to miners, they just kept putting the gaming GPUs into gaming sales, and workstation cards into enterprise sales like always. Then when the bubble burst and all those gaming cards ended up on eBay and Amazon from 3'rd parties trying to cover their losses their sales tanked. Then there was the buyback where Nvidia had to buy back a bunch of chips they produced because their AIBs were left holding 10's or even 100's of thousands of chips with no cards to put them on because demand had dried up.
I mean jokes on them fast forward 2 years and all those chips sold for 2 maybe 3 times what Nvidia bought them back for. But investors at the time were pissed that Nvidia couldn't tell them how many cards went to miners so enter the SEC lawsuit. I mean the profits from selling those bought back chips during the pandemic easily paid for that $5.5M and the Leather Jackets they wrapped it in.
 

Armenius

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I don't understand how knowing how many were sold to miners would change anything or help anyone? They only care about selling a product regardless of to who, and what constitutes a "miner?" Someone who bought 100 GPUs? 50? 25? 5? 2? 1? Literally anyone could mine for this currency so who cares? Whether someone bought 1 GPU or a 100 GPUs this just sounds like capitalism at work to me. Supply and demand.

It's like Sony and/or Microsoft being fined for "selling to scalpers" with respect to the PlayStation 5 and Xbox Series X.
It gave investors a false sense of the company's growth. The volatility of crypto currency means growth that includes miners isn't sustainable.
 

HeadRusch

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I don't understand how knowing how many were sold to miners would change anything or help anyone? They only care about selling a product regardless of to who, and what constitutes a "miner?" Someone who bought 100 GPUs? 50? 25? 5? 2? 1? Literally anyone could mine for this currency so who cares? Whether someone bought 1 GPU or a 100 GPUs this just sounds like capitalism at work to me. Supply and demand.

It's like Sony and/or Microsoft being fined for "selling to scalpers" with respect to the PlayStation 5 and Xbox Series X.

If Nvidia doesn't tell people WHO is buying their product, how would you...as an investor or potential investor.....feel comfortable buying their stock at a certain price with the hope of it turning a profit for you, or of holding onto that stock. That's what this is about. Nvidia doesn't want to say their meteoric sales growth the past few years is because of the mass-hysteria/bullshittery (imho) of Crypto Currencies....because if that gets cracked down upon, sales go back to previous levels whree its gamers, enthusiasts and nobody else :)
 

zamardii12

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If Nvidia doesn't tell people WHO is buying their product, how would you...as an investor or potential investor.....feel comfortable buying their stock at a certain price with the hope of it turning a profit for you, or of holding onto that stock. That's what this is about. Nvidia doesn't want to say their meteoric sales growth the past few years is because of the mass-hysteria/bullshittery (imho) of Crypto Currencies....because if that gets cracked down upon, sales go back to previous levels whree its gamers, enthusiasts and nobody else :)
If people don't tell you WHAT to think, then how will you know what to do!?!? If an investor was that stupid to not not know what cryptocurrency was let-alone know that GPUs were in the news on a weekly basis with relation to crypto mining then that's on them.

It's like suddenly everyone in the world is able to sell their own shit at a premium and so toilet paper is impossible to find on store shelves... if you can't figure out that the TP shortage is due to an overabundance of shit hitting the market at higher than normal prices then that's your fault.

Imagine during the great toilet paper shortage of 2019 if Charmin had to somehow figure out and/or disclose who they were selling toilet paper to. I remember seeing on Facebook Marketplace people were selling toilet paper for WAY over retail... it's the exact same thing.

It gave investors a false sense of the company's growth. The volatility of crypto currency means growth that includes miners isn't sustainable.

Okay but again it's literally impossible to define what constitutes a miner or rather someone buying a GPU for crypto specifically... like how many GPUs can one person buy until they're considered a miner... and not to mention it's impossible to ACTUALLY know why someone bought a product. You could have bought 6 GPUs yourself from different retailers, but you sell them to your friends at cost... you aren't a miner but you are helping your friends out who sold their RTX 2xxx series card in anticipation of buying a RTX 3xxx card but couldn't because nobody could have predicted COVID's impact.

Responsibility in my opinion lies solely on the investor. An investor should be well knowledgeable in what they're investing in, and if you start pumping money into Nvidia during the GPU shortage or slightly before it when crypto was taking off then I think it's on the investor.
 
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HeadRusch

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If people don't tell you WHAT to think, then how will you know what to do!?!? If an investor was that stupid to not not know what cryptocurrency was let-alone know that GPUs were in the news on a weekly basis with relation to crypto mining then that's on them.

No, it's on the company to honestly report their financials to their board and investors. Let's use IBM or PepsiCo, you'd want to see where their sales are coming from........but what if 60% of their market growth driving sales is in...oh I dunno....Russia? Well.....suddenly you're thankful the SEC is forcing those companies to divulge where their sales/growth is.


Responsibility in my opinion lies solely on the investor. An investor should be well knowledgeable in what they're investing in, and if you start pumping money into Nvidia during the GPU shortage or slightly before it when crypto was taking off then I think it's on the investor.

Really? I've got some Theranos investors who'd like to argue that point with you....... :) Where do you think investors get their information from? Casual Observation? Meme's? No, they get it from the publically available financials and then investors can assume the message is accurate...because if it isn't, and the SEC finds out, the SEC brings down the ban hammer and generally people go to Jail.
 

ElementDave

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I mean, they're technically not wrong. You sell product to whomever wants it. I would define the unlawful act of not disclosing data that would affect investors as "wrong," though. Whether or not it was malicious? Can't say, since I don't know if NVIDIA does or is even able to profile every one of their customers to provide that data.
Oh, I just found the wording of the sentence I quoted (from the Verge) amusing — it wasn't meant to imply anything about the case either way.:) The wording from the SEC press release read "[w]ithout admitting or denying the SEC’s findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty", which is uninteresting as one would expect.
 
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Red Falcon

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They lost $2 billion with the failed ARM acquisition alone, which was part of the agreement.
Yet, somehow a $5.5 million fine is going to make them pay?

That would be like any one of us getting fined $5.50 after we just made thousands... worth it. :love:
 

Lakados

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That's the frustrating part. How is any of this justice?
Justice for what? If you go back through their actual lawsuit it was blatantly BS. Shareholders mad because Nvidia couldn’t disclose numbers they didn’t have. AMD was in the same boat but at that time they weren’t worth suing because they had no money. I mean did they know miners were buying their cards, of course, but how do they know how many? Dude buys a card at Bestbuy and mines with it, somebody else buys 10 on Amazon but uses those to build 10 PC’s they turn around and sell to gamers. There’s no usuable metrics outside of monitoring usage that would have given them the data they wanted, and those monitoring tools are invasive to say the least.
The CMP and LHR cards are Nvidia’s attempt to steer the miners so they actually can report on those metrics in a way that keeps them off their back in the future.
 
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ElementDave

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The SEC didn't charge NVIDIA for failing to quantify how many of its GPUs were used for crypto mining, but for failing to disclose information it already had. Yes, they screwed up on some paperwork, but I can't really say I'm outraged over a couple of 10-Qs from 2018.
Imagine during the great toilet paper shortage of 2019 if Charmin had to somehow figure out and/or disclose who they were selling toilet paper to. I remember seeing on Facebook Marketplace people were selling toilet paper for WAY over retail... it's the exact same thing.
Not the Great TP Shortage! That's what those SEC forms are for... 🧻
 

HeadRusch

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Kids, remember: This is the internet, if we weren't fighting about the relevancy of dumb shit like this, we'd all just be surfing for pr0n. This is good discourse.
 

Lakados

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The SEC didn't charge NVIDIA for failing to quantify how many of its GPUs were used for crypto mining, but for failing to disclose information it already had. Yes, they screwed up on some paperwork, but I can't really say I'm outraged over a couple of 10-Qs from 2018.

Not the Great TP Shortage! That's what those SEC forms are for... 🧻
Gotta find the manual for those god forsaken sea shells.
 

Red Falcon

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🐚 🐚 🐚

Shh, you're going to start a panic! ;) The world is not prepared for the Three Sea Shells. It's rumored that the instructions are hidden away in an abandoned Taco Bell. Maybe Red Falcon has a map to the Missing Manual, as he seems to be on top of the Taco Bell situation. :borg: 🌮🔔
Desperate times call for desperate measures. :borg:

S1i4SIL.jpeg


Though if you eat all of that Taco Bell, you might need a few more than three seashells... therefore, manual provided! (y)
 
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