A looming legal threat could shake the foundations of the cryptocurrency industry.
The recent decision by the U.S. Supreme Court to allow a renewed legal dispute between chip manufacturer Nvidia and a group of its investors to proceed has raised concerns within the crypto industry.
In the latest crypto news, according to an industry advocacy group, this move could expose the sector to a surge of “frivolous securities lawsuits.”
In an August 20 amicus brief, The Digital Chamber (TDC), previously known as The Chamber of Digital Commerce, supported Nvidia’s request for the Supreme Court to overturn a previous appellate court ruling from last August. This ruling revived a lawsuit accusing Nvidia of underreporting the volume of GPUs sold to cryptocurrency miners.
Perianne Boring, TDC’s founder, and CEO, expressed:
“Felt compelled to weigh in due to the grave risks of a potential increase in frivolous securities lawsuits based on nothing more than unfounded negative perceptions about the cryptocurrency industry and its high-growth business cycle.”
In its brief, TDC criticized the class action against Nvidia, arguing that the plaintiffs relied on an expert opinion grounded in “unsupported assumptions and inferences” about the crypto industry and Nvidia’s sales. TDC emphasized that the plaintiffs failed to produce any specific documents, presentations, testimony, or internal materials to substantiate their claims.
Cryptocurrency trending news says the brief warned that other plaintiffs could similarly employ experts to make unsubstantiated claims. This trend would disproportionately impact cutting-edge companies, particularly those in the cryptocurrency sector.
The lawsuit, initially filed in 2018, accused Nvidia of concealing over $1 billion in GPU sales to crypto miners, with allegations that CEO Jensen Huang publicly downplayed the extent of Nvidia’s involvement in the crypto market. The suit further claimed that the correlation between the crypto market’s decline and Nvidia’s financial downturn revealed the true extent of Nvidia’s sales to miners.
TDC argued that the case fails to meet the standards established by the Private Securities Litigation Reform Act of 1995 (PSLRA), which is designed to safeguard critical, emerging technologies.
According to the PSLRA, lawsuits must clearly identify each allegedly misleading statement, explain its misleading nature, and provide factual support for the claims—standards that TDC contends this class action does not meet.
If the plaintiffs prevail, TDC believes it could set a troubling precedent, allowing speculative and unsupported claims to succeed in court. The potential flood of lawsuits against crypto companies could hinder innovation by imposing costly legal battles and discouraging investment.
