The Digital Chamber warns that the revived Nvidia investor lawsuit could lead to a surge in “frivolous” securities suits against the crypto industry if allowed to proceed.
An industry advocacy group asserts that the crypto industry may be exposed to a surge of “frivolous securities lawsuits” if the United States’ highest court permits the resumption of a legal dispute between chip manufacturer Nvidia and a class of its investors.
The Digital Chamber (TDC), formerly known as The Chamber of Digital Commerce, supported Nvidia’s request for the US Supreme Court to overturn an appellate court’s decision from August of last year.
This decision revived a lawsuit that alleged Nvidia had understated the quantity of GPUs it sold to crypto miners. The brief was submitted on August 20.
Perianne Boring, the chamber’s CEO and founder, stated that they were “compelled to intervene” due to the significant risks of a potential rise in frivolous securities litigation that are based on unfounded negative perceptions of the cryptocurrency industry and its high-growth business cycle.
TDC asserts in its brief that the expert opinion utilized in the class complaint against Nvidia was based on “unsupported assumptions and inferences” regarding the crypto industry and Nvidia’s sales.
It asserted that the plaintiffs failed to “identify a specific document, presentation, testimony, or any internal material” that substantiated their claims.
It asserted that “other plaintiffs are free to engage the services of other experts to perform the same task.” “The most innovative companies, such as those in the cryptocurrency sector, will experience the most significant impact.”
Crypto.com, Ripple, and Binance comprise TDC’s members.
The lawsuit, which was filed in 2018, claimed that Nvidia concealed over $1 billion in GPU sales to crypto miners and that its CEO, Jensen Huang, publicly downplayed the fact that the company was selling a significant number of its products to the sector.
After the crypto market and Nvidia’s financial results both fell, the lawsuit claimed that miners had artificially boosted sales.
TDC contended that the case fails to adhere to the standards established by the Private Securities Litigation Reform Act of 1995 (PSLRA), which is designed to safeguard “critical, emerging technologies.”
The group contends that the class suit has failed to clearly identify each purportedly misleading statement, explain why it is misleading, and provide facts to support the claim, as required by the act.
“If the plaintiffs prevail, it will establish a perilous precedent, permitting the success of speculative and unsubstantiated claims in court,” the Chamber stated in its statement.
It also stated that a potential influx of lawsuits against crypto companies would impede innovation by “burdening them with costly litigation and discouraging investment.”
“Ultimately, this would impede the advancement of blockchain technology and undermine the very safeguards that the PSLRA was intended to offer to emerging, high-tech industries,” the group stated.
